London - Terry Keene, the chief executive of iSys Capital Technologies, is quick to tell you that he loves Intel. He's been using Intel forever, he says. But he's equally quick to tell you about its limitations for modern financial trading systems.

Those limitations are so stark, he argues, that a trading venue based instead on the IBM Power chip could change the nature of high-frequency trading overnight. And that's what he's trying to do. Within 18 months to be precise.

"All it takes is it has to be faster or cheaper or more reliable with less jitter," Keene told Automated Trader before he spoke to a roomful of bankers, technologists and market data professionals at the Royal Exchange. "If we get one venue up and running on this, nobody else is going to be able to afford to not do this. They're almost going to have to to keep up."

Asked when that might happen, Keene said iSys hoped it would be "12 months, maybe 18 at the outside depending on how aggressive we are". He said iSys is working with several players on different continents, all of whom were "critical players".

Keene said iSys was looking at 2014 for the first venue to go live, adding it "may have something up in test by the end of 2013, maybe sooner if it turns out not to be the whole exchange, maybe if we're just doing some MTFs".

He said iSys has tested all the components and has done tests with Intel so it has benchmarks. "We've got the smartest guys on the planet working on it. So we're pretty confident," he said.

High frequency Heisenberg

When he presents, Keene speaks fast and makes a lot of jokes. Peppering his remarks with anecdotes about Heisenberg's uncertainty principle, he traced the history of the chip, how Intel and AMD came to dominate the chip-making world and why, in great technical detail, IBM's Power chip is such a wonderful secret. "I'm a chip guy," he told the room, asserting that the Power chip was five years ahead of what's on offer from Intel and AMD.

One problem is that Intel technology is based on the lowest-common denominator. "Unfortunately, Intel sells a lot more laptops than they sell high frequency trading systems. So they don't design for high frequency trading systems. We have to adapt ourselves. And we do. A really smart programmer programmes around the limitations that they find in the Intel architecture."

But with a different architecture, that should not be necessary, he said.

Lack of choice has been a historical constraint for the market. Only the Intels and IBMs of this world can generate enough volume in chips to be able to spend $150-200 million building a new design or billions to build a new fabrication plant, Keene said.

For historical reasons, financial systems adopted the Intel-based two-socket systems, despite the advantages of the IBM technology, Keene said. The Intel boxes are inexpensive, he says, but you have to have a lot of them to do much.

"Once you start clustering them you start adding distance between boxes," he said. "So if you assume that you're stacking a whole bunch of Intel two-socket boxes, everytime you leave a box and go to another one you've got some overhang. That overhead is latency, but it's also jitter."

Time and space

That can mean the difference between a successful trade and one that doesn't get processed. But it's not just about time, it's also about space.

As storage needs soar due to regulatory requirements, it becomes even more important to use a system that takes up less space.

"We can collect tick data right now, and keep a tick warehouse," he said. "But with regulation, what they're talking about is real time surveillance, real time monitoring. To do that we're going to have to design some new stuff. "

Keene said the "new stuff" has to be multi-tiered. Tier one is for running as many IO operations per second as you can write as fast as you can. The second tier involves sorting them and performing analytics. The third tier is to store the data.

Regulators ideally would like to be able to access the second-tier data in real time, which is some ways away.

"But it's happening," Keene said. "There's a lot of R&D going on specifically in this area. Net net is the more volume, the more of these Intel boxes you have to put in.... It just gets bigger, more complex, uses up more space, pulls more power, creates more heat, causes more people to run around trying to maintain it."

A venue based on the IBM chip could change all that, he says.

Several venues are listening, he said. Not only could they save costs, but also they could use the space that gets freed up to rent out to proximity-hungry market participants.