Precise Time Stamping In Demand for High Frequency Traders

Banks and brokerage firms catering to high frequency trading firms use sophisticated switches in their data centers to measure the speed of packets moving across their networks. More accurate time stamping has become critical to banks that provide service level agreements (SLAs) to their clients.

Today, Apcon, a Portland, Oregon-based maker of scalable network monitoring solutions for enterprise data centers worldwide, announced the 36 port Intellaflex Time Stamping & Packet Slicing Blade, that can be used to times tamp data packets from high frequency trading firms. “We announced a new blade that does the highest accuracy of time stamping. It also delivers the ability to do the highest amount of capacity of time stamping,” said Paul Ginn, Apcon’s director of marketing in an interview today.

Since there are 36 ports on this particular blade, with 1G or 10G Ethernet, firms can put up to 8 RU (rack units) on a switch, stacked one, on top of the other, explained Ginn. In an 8 RU that gives someone 288 ports of time stamping which is far and above what’s available in the industry today, he claims. It will also do traditional aggregation and load balancing, which are normally handled by a specific aggregation switch. “Now the functionality is embedded and integrated into the one blade,” said Ginn.

Time stamping is primarily an application sold to financial institutions, because the industry has a lot of time sensitive transactions going on, noted Ginn. Trading gets the most attention because of enforceable service level agreements, he explains.

As these [data] packets are passing through their network they need to measure the latency of the communications that are passing through their network, so they can tell precisely when things are occurring, said Ginn. “They use our input, the timestamp on the packets along with other tools, said Ginn, noting that APCON works with latency monitoring companies such as Corvil, Wild Packets and TS Associates. “Banks are taking the data stream with our time stamp and deriving the information they need to meet their particular SLAs,” added Ginn.

Since network latency is critical to high frequency trading, financial institutions are using switches in their data centers to measure the time it takes a packet to travel across their network and execute the trade on an exchange. The SLAs are around the immediacy or timing of the trade.

“The second has been sliced into hundredths, thousandths and even billionths. This is what makes accurate time stamping so crucial and why APCON's sub-10nS blade is a much needed product for the financial industry," - commented Olga Yashkova-Shapiro, Program Manager at Frost & Sullivan in the release.“

> Most of the clients using these types of switches will have a heightened time sensitivity and high velocity of trades that are going on repetitiously, he said.

Large clearinghouses that serve HFT firms doing ghigh volumes would also be interested. “A fraction of a cent difference in price at those volumes means a significant amount of money,” says Ginn. “This level of time stamping and level of accuracy is news and it’s evolved out of this industry, said Ginn, referring to financial institutions. “The ability to make a trade a microsecond earlier is getting them a small gain,” said Ginn. “That small gain on any trade is magnified to a significant gain because of the size of the trade,” he added.

On the packet slicing side, which is broader functionality, the switch can take out certain bytes of information such as anything sensitive, like credit card information on transactions and social security numbers. “The security department in any financial institution is going to be interested in protecting that information and a monitoring tool doesn’t need to see that information,” said Ginn. Apcon can “strip out that information for security and it also lowers the physical number of bytes going to a particular tool, which makes the tool more efficient since it can see a wider window of time.”

[To learn more about storage in the cloud, register for Interop here and check out the “Outgrowing Your Data Centers? Look to the Cloud for Relief” session on October 4 in NYC.]

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio