In the world of high-frequency trading, where speed matters most, technology that can gain a crucial split-second advantage over a rival is valued above all others.
And in what could be the next phase of HFT, firms are looking more and more to hardware solutions, such as field-programmable gate array (FPGA), as it can offer speed gains on the current software used by HFT firms.
FPGA technology, which allows for an integrated circuit to be designed or configured after manufacturing, has been around for decades but has only been on the radar of HFT firms for a couple of years. But new solutions are beginning to pop up that may eventually see FPGA become more viable and be the latest must-have tool in the high-speed arms race.
For instance, a risk calculation that can take 30 microseconds to perform by a software-based algorithm takes just three microseconds with FPGA.
Current HFT platforms are typically implemented using software on computers with high-performance network adapters. However, the downside of FPGA is that it is generally complicated and time consuming to set up, as well as to re-program, as the programmer has to translate an algorithm into the design of an electronic circuit and describe that design in specialized hardware description language.
The programming space on FPGA is also limited, so programs can’t be too big currently. Although, some tasks such as ‘circuit breakers’ are an ideal current use for FPGA technology.
It is the drawbacks, as well as the costs involved, that are, at present, are holding back trading firms from taking up FPGA in greater numbers. However, because of the speed gains that it offers, much resources are being poured into FPGA in a bid to make the technology more accessible—and some technology firms are now beginning to claim significant speed savings with their products.
Cheetah Solutions, a provider of hardware solutions for financial trading, is one firm that says it can now offer reconfigurable FPGA systems to trading firms. It says its Cheetah Framework provides building blocks which can be configured in real time by a host server and an algorithm can execute entirely in an FPGA-enabled network card with the server software taking only a supervisory role by monitoring the algo’s performance and adapting the hardware algo on the go.
“True low latency will only be achieved through total hardware solutions which guarantee deterministic low latency,” said Peter Fall, chief executive of Cheetah Solutions. “But if the market moves, you want to be able to tweak an algorithm or change it completely to take advantage of current conditions. Traditional FPGA programming may take weeks to make even a simple change whereas Cheetah Framework provides on-the-fly reconfigurability.”
Another technology firm to claim that it can make automated trading strategies even faster and more efficient is U.K.-based Celoxica, which recently debuted its new futures trading platform, based on FPGA technology, which involves a circuit on one small chip that can be programmed by the customer.
Celoxica says the platform is designed to accelerate the flow of market data into trading algorithms to make trading faster. It covers multiple trading strategies and asset classes including fixed income, commodities and foreign exchange.
“For futures trading, processing speed, determinism and throughput continue to play a crucial role in the success of principle trading firms and hedge funds trading on the global futures markets,” said Jean Marc Bouleier, chairman and chief executive at Celoxica. “Our clients and partners can increase focus on their trading strategies for CME, ICE, CFE, Liffe US, Liffe and Eurex.”
While last August, Fixnetix, a U.K. trading technology firm, said that it had signed up a handful of top-tier brokers to use its FPGA hardware chip, which executes deals, compliance and risk checks, suggesting that this niche technology is picking up speed rapidly.
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