Welcome to the
Financial Services Club
Modus Operandi

Established 2004
Focus is the future of financial services
Usually a keynote from an industry practitioner...
Five Groups

•   The Financial Services Club UK
•   The Supply Chain Forum
•   The Capital Markets Club
•   The Financial ...
Previous Speakers include:

Sir John Gieve, Deputy Governor, the Bank of England
David Bagley, Global Head of Compliance, ...
Connectivity Options
                  Connectivity            Equinix Service
                                           ...
Speed: Roundtrip Latency By Venue

      Chi-X internal latency is approximately 350 microseconds
                        ...
Trading System Capacity
  Chi-X is built on scaleable low cost hardware enabling increases in
current capacity quickly and...
Total Chi-X Activity vs Capacity
Chi-X can currently handle up to 115,000 messages per second without a degradation in lat...
The Technology behind NASDAQ OMX Europe

 • Quick business overview.
 • Proven technology from the NASDAQ Stock Market.
 •...
Your passport to European trading




                                                                    10
© Copyright 2...
COLT in brief


COLT is a leading provider of data, voice and managed services to
finance, business and government custome...
COLT in Financial Services


 > Over 1,000 financial services customers
 > Europe’s top 20+ stock exchanges/MTFs,
   7 of ...
End to End Latency in the Trade Cycle = X+Y+Z
      Trading Platform
                                                     ...
Network latency - Causes


Main causes for network latency
 > Serialization delay
   – determined by packet size / bandwid...
Network latency - Solutions


Primary ways to reduce market data latency
 > Receive market data directly from exchanges
 >...
What has changed in the market?

 >Banks now open to idea of moving their trading systems closer
 to the Exchanges




 >E...
What’s in a millisecond?


           A 1-millisecond
         advantage in trading                                    NYS...
Join Tonight!

• Personal Membership
   – Specialist Group, £250 per annum (just their events)
   – Full Club, £500 per an...
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Low Latency, FSClub, 260209 (download)

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Meeting of the Financial Services Club on 26th February 2009 with Chi-X, Turquoise, NASDAQ OMX, Colt Telecom and BT. You can see explanation and full meeting details, with video, at http://thefinanser.co.uk/fsclub/2009/03/the-true-power-of-low-latency-for-europes-mtfs.html

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Low Latency, FSClub, 260209 (download)

  1. 1. Welcome to the Financial Services Club
  2. 2. Modus Operandi Established 2004 Focus is the future of financial services Usually a keynote from an industry practitioner, government policymaker, regulator or someone who’s really interesting Covers all areas of the financial markets: retail and investment banking, capital markets, insurance, brokerage Aimed at any organisation interested in these markets: banks, insurers, vendors, consultants Presentations, Debates, Question Times, Dinners, Roundtables Chatham house rules
  3. 3. Five Groups • The Financial Services Club UK • The Supply Chain Forum • The Capital Markets Club • The Financial Services Club Ireland • The Financial Services Club CEE
  4. 4. Previous Speakers include: Sir John Gieve, Deputy Governor, the Bank of England David Bagley, Global Head of Compliance, HSBC The Right Honorable Lord Cecil Parkinson John Sculley, former CEO Apple and Pepsi-Cola Lindsay Tomlinson, Vice Chairman, Barclays Global Investors David Yates, President, First Data Europe, Middle East & Africa Annette Austin, Chief Operating Officer, ABN AMRO Robin Phipps, former Group Executive Director UK Operations, Legal & General Brian Pomeroy CBE, Chairman of the Payments Council Detective Chief Superintendent Steve Wilmott, Head of Economic Crime Unit, City of London Maria Velentza, Deputy Head of Securities Markets Unit, European Commission James Alexander, co-founder, Zopa and Egg Sharon Bowles, MEP Stuart Bernau, Group Executive Director, Nationwide Building Society Damian Atkinson, CIO, ING Wholesale David Bagley, Global Head of Compliance, HSBC Tom Buschman, CEO and Chairman, TWIST Ken Farrow, Director, Fraud Services, Control Risks Angela Knight, Chief Executive, the British Bankers’ Association
  5. 5. Connectivity Options Connectivity Equinix Service Chi-X Equinix Suite Client Layer Provision Order entry Network Service 5 - 7 ms* Provider < 1 ms* Leased line CHIX MD 0.4 ms* Co-lo 0.45 ms** Quotes Round trip latency in all cases *Average based on a central London location ** Average based on aggressive order executed – round trip times
  6. 6. Speed: Roundtrip Latency By Venue Chi-X internal latency is approximately 350 microseconds Median Latency Trading Venue (milliseconds) Chi-X Europe 0.4 (co-located) Turquoise <4 LSE SETS <6 NASDAQ OMX Europe 10 Euronext 13 Deutsche Börse Xetra 37 OMX 43 Borsa Italiana 106 SWX 216 SWX Europe 230 Source: Internal system performance measurement statistics for average DMA order messaging in October 2008, supplied by Chi-X trading participant. These internal figures are for round trip latency message acknowledgement based on sending an average number of messages to the exchange system and obtaining a response back to the participant's system over the course of a normal trading day. These figures are provided for illustrative purposes only and are not intended to represent an independent performance measure of latency.
  7. 7. Trading System Capacity Chi-X is built on scaleable low cost hardware enabling increases in current capacity quickly and easily at low cost Chi-X is wholly FIX compliant Core cash equity system order flow Trading Venue capacity (messages per second) Chi-X Europe Ltd 115,000* London Stock Exchange 12,000** Turquoise 6,000** Source: *Internal benchmark testing, December 2008 ** Trading Venue websites, December 2008
  8. 8. Total Chi-X Activity vs Capacity Chi-X can currently handle up to 115,000 messages per second without a degradation in latency At its peak on 6th February, the number of messages handled per second (34,316) was around 30% of the total capacity On the same day there was a peak market data output of 46,879 messages per second
  9. 9. The Technology behind NASDAQ OMX Europe • Quick business overview. • Proven technology from the NASDAQ Stock Market. • Inet platform – Latency of 250 microseconds with capacity of 125k orders/sec. • Connectivity via Proprietary and Industry Standard protocols. • The first marketplace in Europe to offer Pan-European Order Routing. - Based initially on price, but then order latency. 9 © Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
  10. 10. Your passport to European trading 10 © Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
  11. 11. COLT in brief COLT is a leading provider of data, voice and managed services to finance, business and government customers in Europe > Founded in 1992 to service the financial sector in London > Financially strong - Majority shareholder Fidelity Investments > Unique pan-European network and data centre infrastructure > 4,000 employees in 15 countries, including Europe, US and India Financial Services is our heritage, providing mission critical services that support: > Trading / order execution and market data connectivity > Payments, transaction processing, liquidity management > Information delivery and security
  12. 12. COLT in Financial Services > Over 1,000 financial services customers > Europe’s top 20+ stock exchanges/MTFs, 7 of which we host > World’s top 25 financial services companies > Top 5 global providers of financial information > 24 of the top 25 European hedge funds > 13 central banks > Largest accredited SWIFT network-provider, with 750+ European clients > Largest 5 providers of market data
  13. 13. End to End Latency in the Trade Cycle = X+Y+Z Trading Platform Order & Ticker Plant Management System Data Centre Data Centre Exchange Customer Site Z X Y The exchange Latency is the time The point of the network is to use a must transact the between issuing combination of technology and network trade as fast as the instruction to to make the path between X and Z as possible trade and receipt of fast and as short as possible completion notice Data can not travel faster than the speed of light = 300km per millisecond
  14. 14. Network latency - Causes Main causes for network latency > Serialization delay – determined by packet size / bandwidth > Switching delay - caused by the number network hops > Propagation delay – a function of the physical distance The only known way to shorten the propagation delay is to shorten the physical distance between components
  15. 15. Network latency - Solutions Primary ways to reduce market data latency > Receive market data directly from exchanges > Increase bandwidth > Upgrade the feed handlers, ticker plant, and distribution platform > Co-locate applications > Most COLT data centres are located close to the country exchanges so latency is low and therefore suited to host trading applications and order management systems
  16. 16. What has changed in the market? >Banks now open to idea of moving their trading systems closer to the Exchanges >Exchanges want to offer the right services but don’t have the right capabilities >Bigger brokers want to offer ‘premium’ services to their most important hedge fund customers
  17. 17. What’s in a millisecond? A 1-millisecond advantage in trading NYSE Trading applications can be worth $100 million a Traditional year to a major Electronic brokerage firm Algorithmic Trading Source: InformationWeek ‘Business At Light Speed’, April 2007 Speed is the deciding factor with markets moving in a millisecond. The key is to have low network latency between trading platforms and the exchanges.
  18. 18. Join Tonight! • Personal Membership – Specialist Group, £250 per annum (just their events) – Full Club, £500 per annum (any / all events) • Corporate Membership – Single Seat, £1,000 per annum (1 attendee at any / all events) – Specialist Group, £2,500 per annum (3 attendees per meeting and Dinner Table) – Full Club, £5,000 per annum (3 attendees all meetings and Dinner Table)

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