No Tolerance for Latency? Spot Trading Opportunities in Real-Time with Ultra LOLA

Summary:In the electronic financial marketplace, trading systems are only as efficient as the infrastructure on which they work. To keep daily operations profitable in an industry that is increasingly driven by the speed of computerised software-driven trading, independent traders and NBFCs need to adopt very low latency networks. As a customised leased line service by TTBS, Ultra LOLA helps traders process their orders faster, giving them better opportunities to maximise profit.

The quote "Time is money" is often attributed to Benjamin Franklin's "Advice to a Young Tradesman" written in 1748. And while the essay was published centuries ago, it perfectly fits the modern electronic and algorithmic trading domain.

Although the IT department in all industries is concerned about latency impacting their network infrastructure, financial trading is entirely dependent on the latency factor.

In simple terms, latency is the delay or time-interval between a request and a response. In financial trading, it directly impacts the amount of time taken for a trader to interact with the market.

Effective ultra-low latency technology is vital for making a trade at the desired price before it changes again. The speed of closing transactions matters to all high-frequency traders, market makers and statistical arbitrage traders.

The challenges brought by latency in trading

With the advent of online trading, the likelihood of gaining competitive advantage or disadvantage due to latency is significant.

A trading platform configured on a slow network connection can result in problems such as slippage, re-quotes, order rejections and delays in updating price charts.

Order routing and its execution are particular areas in electronic trading where latency issues can skew the playing field. The usual routing of a market order in retail trading involves the following steps:

• A trader enters the order remotely via an online trading platform
• The broker servers receive the order
• The broker relays the order to the exchange or market continuously during trading hours.
• Order gets executed at the exchange for the desired price captured in the algorithm server.

High latency can plague any stage of this order routing process. An order arriving late in the market is likely to be filled at a disadvantageous price, increasing the possibility of loss due to slippage.

Thus, it is imperative to minimise latency as an active trader for quick access to market information and get orders fulfilled efficiently.

How does Ultra LOLA help?

Ultra LOLA is an ultra-low latency leased line service offered by Tata Tele Business Services (TTBS). It builds seamless two-way channel connectivity to the NSE and BSE, India's key stock exchanges.

With latency less than 200 microseconds between connected centres, it makes electronic trading more robust, providing speeds that cannot be obtained on other Internet service connections.

Here are some ways in which Ultra LOLA gives you an edge in electronic and algorithmic trading:

Permanent carrier-grade connectivity

With TTBS Ultra LOLA, you stay reliably connected to the market at all times. Its carrier-grade connectivity implies high levels of performance, speedy trading and faster execution. It builds a network that supports real-time access and response to rapidly changing data in dynamic financial markets.

No more worries about downtime disrupting work

Network outages can spell disaster for traders – another area where Ultra LOLA stands out. Its triple-path redundancy translates into practically no 'downtime incidents'. In a market where one needs to make the most of real-time prices, it allows you to continue trading without worrying about possible connectivity disruptions.

More security on your network

As a point-to-point and uncontended connectivity solution, Ultra LOLA has a high level of inbuilt security. It allows you to safely transmit information to your trading partners, investors, businesses and other involved entities without any concerns, making trading in financial instruments more reliable.

Reduced possibility of manual mistakes in setting trades

It can be tedious to place a large number of orders in a day, and the likelihood of mistakes also increases with growing volume. With software-driven trading enabled by high-speed Ultra LOLA, it is easier to feed orders directly and accurately into a trading system. Using trading algorithms and straight-through processing to enter orders, one can also minimise the risk of 'fat-finger errors'.

A low latency leased line for a variety of financial trading profiles

Ultra LOLA is a tailor-made leased line for anyone operating in the stock, bond, derivates, commodities, arbitrage or forex market. It supports dealers, brokers, investors and exchanges.

Designed using state-of-the-art technology, it brings you a standard bandwidth of 1 Gig and N*1 Gig along with SLA-backed, best-in-class service assurance. Subscription payments can be made on a monthly, quarterly, half-yearly or yearly basis.

To know more about TTBS Ultra LOLA, connect with us at 1800-266-1800.