Proximity Hosting: Plug’n’Trade or Pay’n’Wait?

Mark Thornberry, Managing Director at RTS Realtime Systems, London

Trading is a business that has never been renowned for its charity and in today’s auto/algo trading environment that reputation has only hardened. With thousands of smart professionals chasing the same brief inefficiencies, the only position in the order race that matters is first. Little wonder therefore that proximity hosting of auto/algo trading strategies has become so popular. However, the selection of that hosting facility can be something of decision-making minefield.

Get me to the show on time

It is tempting to assume that data centres are purely about cutting latency through proximity. That is of course a major consideration, but facility is also critical. Particularly in the high-frequency trading spectrum, an individual model’s ability to capture profitable inefficiencies has an ever-decreasing half life. Where once a model might remain viable for years, it is now increasingly common for performance to decay in a matter of days or even hours. The ferocious level of competition among the technologically well-armed means that slow deployment will leave a model attempting to capture inefficiencies that no longer exist.

In such an environment, implementation latency is a key factor. Every hour of delay in deploying a trading model in a new market spells lost opportunities and increases the risk that the model will arrive after the party is over. Therefore proximity and trading applicaion hosting providers have to be capable of implementation times measured in hours, not days or weeks.

‘Bare bones’, full service or somewhere in between?

Proximity and trading application hosting services typically consist of four broad options: ...

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