Speed is Paramount
Low-latency access to the markets continues to be a key demand for market participants, including institutional investors.
Private financial services and investment firm Wedbush Securities has recently introduced a host of new initiatives aimed at giving institutional customers the same low-latency access to the markets that quantitative and high-frequency traders have been using in a move to help even out the playing field.
“We are always working to engineer solutions for low-latency access to the markets,” Kevin Beadles, managing director of the Execution Solutions Group at Wedbush, told Markets Media.
The customers targeted by Wedbush’s new Execution Solutions Group are its institutional accounts, which include the buy side, traditional buy side and the sell side. At the same time it is launching a new trading platform, born out of its acquisition of technology developer Lime Brokerage last year. The new platform will dramatically speed up trades for fund managers and other institutional investors.
Ten-year-old Lime Brokerage is a provider of infrastructure and network technology for low-latency quant trading groups. Following Wedbush’s acquisition, that same platform was re-engineered over the next six months to give institutions that same access, according to Beadles. As part of that new focus on institutional customers, Wedbush launched the Execution Solutions Group.
“We are looking to give institutional clients intelligent access to the markets,” said Beadles.
Lime Brokerage earlier this year also launched Lime Direct, which provides full compliance for SEC rule 15c3-5, while adding less than 250 nanoseconds of latency in each direction.
Securities exchanges are also looking toward avenues of lowering latency and increasing speed for their participants.
“Speed remains important, it’s become the norm,” David Herron, chief executive officer of the Chicago Stock Exchange, told Markets Media.
Speed is invariably coveted by certain types of investors, most notably high-frequency and algorithmic traders. Many exchanges and venues are looking for ways to attract more HFT firms, with the ever-increasing emphasis on lowering latency and increasing speed. The International Securities Exchange continually upgrades its trading engine, Optimise, in an effort to minimize latency. The Singapore Exchange touts the speed of its order matching engine, Reach, as the fastest in the world.
CME Group recently launched its co-location services, which include hosting, connectivity and support services. It is one of among many exchanges worldwide looking to increase the speed and lower the latency of their trading platforms, which most directly benefits high-frequency traders. Co-location facilities are located as close to their machine engine as possible, giving trading firms, including HFT firms, nearly instant execution times. HFT has grown to about 75% of trading volume in the U.S., according to industry estimates.