$200 million investment gives Singapore Exchange the fastest trading engine
Technological factors are key to high frequency trading success, and SGX uses this to leverage on $900 billion capitalisation of SGX-listed companies. August 02, 2011 | Nadir AhmadIn a Beijing speech on July 8, 2011, Andrew Haldane, the Executive Director for Financial Stability at the Bank of England, outlined what he believed were the reasons for the ‘Flash Crash’ of May 2010, during which stock prices fluctuated wildly albeit briefly. One of Haldane’s key points was the danger posed by high-frequency trading (HFT), which he argued has led to less risk management and increased volatility. He also commented on the ‘arms race’ of the HFT world, where technologists compete for the fastest trading infrastructure in the way traders compete for the best trades, saying that reducing time intervals beyond a certain point leads to fatter tails and an increased probability of catastrophe. Haldane is one of several figures voicing concern over HFT, which has become a common or even dominant way to trade on exchanges worldwide. So what are the factors that a firm has to look out for when conducting this risky and high-margin activity? Please click to view enlarged image
One of the most important factors in HFT systems is the hardware, which determines the speed in which transactions can be placed. Latency, or lag, refers to the constraint of some interval of time between the placement of an order and its execution. To demonstrate just how important latency is, advantages are measured in microseconds. This can be seen in currency trading, where the fastest traders can sometimes earn billions of dollars through arbitrage, profiting from and ba... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Channels, Exchanges, Markets & Exchanges, Mobile Banking, Retail BankingChannels,Exchanges,Markets Exchanges,Mobile banking,retail, Channels,Exchanges,Markets & Exchanges,Mobile Banking,Retail Banking, Keywords:HFTS, Flash Crash, SGX, Latency HFTS, Flash Crash, SGX, Latency
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