Cost Cuts, Outsourcing Remain in Focus
In a market that continues to be less than robust, outsourcing connectivity and market data is increasingly appealing to automated traders with limited budgets that seek to trade across asset classes and geographic borders.
Hardware-based products are coming to the fore for reasons of increasing speed, fostering innovation, and accessing new strategies and regions, said Diane Saucier, recently appointed to head Celoxica’s U.S. business development.
“In the era of co-located trading, physical distance, processing speed, determinism and throughput capacity have been the top priorities,” Celoxica President Lee Staines said in a recent release.
With margins squeezed, cost containment ranks high for market participants across the spectrum, including high-frequency traders. Firms that once were intensely competitive in developing software and “trying to write code faster than a vendor” have shifted their focus to handling more data across markets, and developing trading strategies, Saucier said.
Celoxica’s hardware-accelerated market data and order-execution products enable firms that co-locate or proximity host to shed unnecessary network hops and minimize latency by offloading processing to field-programmable gate array (FPGA) cards that optimize inbound market data and outbound execution speed. Eliminating architectural latencies and having a single server in a data center are other ways to shave costs, Saucier noted.
Having a single application programming interface (API) for accessing asset classes across markets, with Celoxica handling the normalization and updates, reduces the cost of hardware as well as operating expenses, Saucier said. That also simplifies the efforts of developers writing black-box applications, she added.
“Maintaining gateways to exchange APIs can be expensive as well as difficult, as they are updated at least once a year,” she told Markets Media.
Chicago is a growth market for automated trading, according to London-based Celoxica, which has offices in Chicago, Paris, and New York. Being in Chicago and plugged into the futures and options market sector will help raise Celoxica’s U.S. profile, Saucier said.
The company was involved initially in European equities and then connected to the CME and ICE markets. The next wave of opportunity will be the ability to look at more complicated sets of strategies by bringing in more data from different markets including OTC swaps, futurized versions and swap futures, and facilitate taking in all markets in a single feed, Saucier said.
And while the high-frequency trading debate continues, Saucier said the methodology “is not going anywhere, and there is a lot of message traffic.”
Celoxica continues to hone its product set for risk management. “Between U.S. and European regulators it is not an insignificant task to help customers understand the requirements for risk management and what it means for them,” she said.