Thursday, May 4, 2017

120ns Half Round Trip Network Latency, OMG!

Everyone hates waiting, and as such we continually improve the performance of our technology to remove this waiting, often called latency. In markets like financial trading this latency can be monetized. Several years ago a high frequency trading shop told me that for them a one microsecond (millionth of a second) improvement translated to $60K per network port per day. How is that even possible? Well, if my stock market trade get into the exchange before your's I win, you lose, it's that simple. Prior to May 2017 Solarflare had a network latency solution for electronic markets that delivered 250 nanoseconds (billionths of a second) from tick to trade. The tick in tick to trade is the market data that arrives from the exchange via a network packet.

So when NASDAQ generates a stock market ticker signal indicating that IBM is now trading at $160/share, your order into NASDAQ could be as quick as 250 nanoseconds plus the time it takes your algorithm to decide to buy. The 250 nanoseconds is how much time it will take for the market data, a UDP network packet, to be brought into the FPGA based NIC, plus the time it will take to generate the order as a TCP packet and inject that order back into the exchange. To put this into perspective, 250 nanoseconds is the time required for a photon of light travel 82 yards, less than a football field.

If that doesn't sound fast enough, this week Solarflare, LDA Technology, and Xilinx announced LightSpeed TCP which under the proper circumstances can reduce network latency for trades from 250 nanoseconds down to 120 nanoseconds. So by contrast 120 nanoseconds is the time required for light to travel 40 yards. So they've taken trading from a kickoff return to a few first downs.

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