You probably wouldn't think that spending a thousand dollars to save a second of productivity would be a worthwhile investment. Nor would your CFO. Yet the makers of a device costing $34,000 hope you'll spend that much to save a few hundred nanoseconds. The company is Voltaire, and its device is the Grid Director 4036E, a high-performance InfiniBand-Ethernet switch and IP accelerator that it claims delivers lower network latency than competitive products and gives securities trading applications a decided edge. The Grid Director 4036E will cost about US$1000 per port.
Set to begin shipping in March, the Grid Director 4036E is a 1U rack mount device with 34 InfiniBand ports, each capable of 40Gb/s sustained transfer rate, plus a pair of Gigabit Ethernet ports of either 1 or 10 Gb/s. Total throughput is rated at 2.72 Tb/s, according to the company, with InfiniBand port latency at less than one hundred nanoseconds, and hardware-based InfiniBand-Ethernet bridging in less than two microseconds.
Concerning the unit's target market, Asaf Somekh, Voltaire's vice president of Marketing, says, "In investment banks, exchanges and trading organizations, the trading strategy has been transferred from the brains of traders to algorithms and is implemented in very fast ways. For them, latency is everything. If you can offer a lower latency, they can be better than the next bank or trading company." Algorithmic trading systems, he said, issue simultaneous orders to multiple exchanges for the same security. "Whichever firm comes back first wins the business." So a few hundred nanoseconds can translate to hundreds of thousands of dollars in business for a given transactions, putting millions of dollars per year at stake.
Backing up that claim is Feargal O'Sullivan, head of Enterprise Software Americas for NYSE Technologies, which develops, hosts and deploys data centers and trading systems. "The speed of light counts for our users. They do everything they can to reduce the time it takes to make trading decisions within their own servers," he said in a phone interview today. According to O'Sullivan, these systems contain three main parts: the market data-feed handlers that process raw market data, a middleware distribution layer with a range of tools for making trading decisions and market access gateways, which send trades and orders back to the markets.
At the heart of such trading decisions, O'Sullivan explained, is the matching engine, putting buyers with sellers, and its physical location can be a major factor. "If you're 20 miles away or 200 yards away, being that close guarantees the lowest possible latency. They want the order to get in quickly because someone else might be next to them trying to get the same trade."