High Latencies - Facilitating Trading Inclusiveness

GENEVA, Sept. 8, 2018 /PRNewswire/ -- The phrase "Time is Money" by Benjamin Franklin is rightly used for the trading market as it deals with time and money in the most flagrant manner. Here, time/latency is defined as the round trip taken to carry out a transaction initiated by a trader from one end to the other, i.e., time lapse from order request sent by the trader and its response received by him. This means that the longer the round-trip latency, the greater the possibility that a trader may lose money or the opportunity to trade at a desired price. For the trading market, we can safely say that Time is inversely proportionate to Money.

1. Explaining High Latency.
In earlier times, when electronic trading was not prevalent, the latencies did not matter as traders used screens to fetch prices for stocks and traded over their phones. Now, with most of the trading being programmed, latency of an exchange matters. The issue of high latency was stemmed by the equities market, which is now adapting the automated algorithm trading. Now, with the other markets following its footsteps, transaction latency has become a key point for all exchanges. For example: The Bombay Stock Exchange claims to be the world's fastest exchange, with a median trade speed of 6 Microseconds. Whereas global exchanges, like NASDAQ, claim to have latencies from 10 - 100 Microseconds.

2. Why is low latency needed?
In today's time, the losses incurred by traders due to high latency is unconceivable. "Data Lag" is a popular problem and has occurred due to the inefficiencies present in the data-streaming process of the exchange or a third-party firm. Consistent order fills and low slippage are key components of profitability that depend on an order arriving at market ahead of the competition. All these variables are affected by latency, whether it is an over-the-counter trade(OTC) or an exchange-based trade. In either situation, high latency has the potential to wreck the order-routing process, causing a delay in reaching the market and making the trade happen at a different price than that expected by the trader. Such a high risk of a trader losing opportunities to trade, due to no fault of his own, is devastating!

3. Need of the hour!
There is a desperate need for exchange platforms with lower latencies. The institutional investment firms might have financial advantages of investing in securing direct market access, but smaller exchanges are leaving their investors high and dry! Amidst this is an upcoming exchange platform, MoonX, with promising technology that is developing a trade engine that will provide users deterministic latency and high throughput. MoonX's engine has the industry's lowest latency, in-built fault tolerance, risk management and disaster recovery mode. MoonX's Nano-second technology is ground breaking and has the capacity to enhance the face of modern trading.

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SOURCE MoonX