WALL STREET S DREAM TRADING AT THE SPEED OF LIGHT

Transcription

1 WALL STREET S DREAM TRADING AT THE EED OF LIGHT OVERVIEW HIGH-FREQUENCY TRADING Equity trading is all about buying low and selling high. Traders spot a temporary imbalance in supply and demand, take a position, and hold it to create equity. As a result of high-speed computers using high-speed communication networks, a long-term position in today s high-frequency trading environment is two hours and temporary imbalances happen in microseconds or even nanoseconds. Electronic trading using algorithmic strategies is not new, but the frequency of the trading has increased exponentially. Experts estimate that over 70% of the daily trading volume is performed through high-frequency trading firms. The volume of electronic trades has forced early closing of trading floors in stock exchanges around the world (London and Tokyo, for example) and reduced the size of the floors in New York and Chicago. Soon, floor traders will be a thing of the past. Firms using high-frequency trading earned over $21 billion in profits last year. Estimates done by the TABB Group indicate that a 5 millisecond delay in transmitting automatic trades can cost a broker 1% of its flow, which could be worth $4 million in revenues per millisecond. According to Reuters, trading a stock is now far faster than a blink of an eye or the speed of a lightning strike. In the race to shave time, high-frequency traders are ramping up technology to get closer to the speed of light. DEFINING A FRACTION OF A SECOND 1 millisecond (ms) = one thousandth of a second 1 microsecond (us) = one millionth of a second 1 nanosecond (ns) = one billionth of second 1 picosecond (ps) = one-trillionth of a second THE LATENCY ENIGMA Latency, the delays that occur in transmitting buy and sell orders, is key to high-frequency trading. Another important measure is throughput, which measures how much data can be processed over a period of time. Lower latency and more efficient throughput mean faster trading and better profits for the trading firm. Intel is working with Deutsche Bank to optimize processing throughput for their low-latency, high-throughput trading platform. IBM, another supplier of high-throughput trading platforms, reports that the speed of light is the biggest issue for most of their clients. The maximum speed of light is 300,000 km per second. To the dismay of Wall Street, no matter how fast computers and software generate trades, any network transmitting data introduces latency because of the fiber-optic media that transports it. While networking equipment vendors continuously optimize their equipment, the basic laws of physics are still in place. Light propagation on a fiber-optic network introduces a constant latency of approximately 5 microseconds per kilometer (0.6 mi). 1

2 To minimize the network latency, many high-frequency traders physically move their systems as close to the Electronic Communication Network (ECN) or trading exchanges as possible. A data center in Weehawken, NJ that houses five major exchanges including the American Stock Exchange, Philadelphia Stock Exchange, and the BATS Exchange, offers co-location to trading firms. This location ensures almost zero network latency to those exchanges, but co-location is not always available in many exchanges. Another popular means of minimizing network latency is central hosting facilities. These data centers are located within a few miles of the exchange where trading is executed. The Commodities Federal Trading Commission (CFTC) recently proposed rules regarding equal access for all traders to co-location or central-hosting facilities. LOW-LATENCY OPTICAL TRANORT The last few miles from the common network location to the exchange are covered by a fiber-optic network. Providers serving the financial markets are fine-tuning their routes to reduce latency, in some cases cutting out loops and diversions, in others pulling new fiber or straightening out detours. In the end, reducing network latency in these last miles boils down to latency-optimized optical transport equipment. Conventional Low-Latency Solutions Today, many optical transport systems integrate network technologies that contribute little or no network latency. In applications where latency is an issue, these components minimize the latency introduced in the transport network. Below is a list of some common low-latency solutions. Native Wavelengths A conventional approach to low-latency solutions uses native or unprocessed (2R) wavelengths. Most industry DWDM systems carry 1 Gbps and 10 Gbps services over an individual optical wavelength, thereby avoiding any type of multiplexing. With 10 Gbps running 10 times faster than a 1 Gbps line, providers serving the financial markets tend to migrate to 10G native transport. Dispersion Compensation Fiber or Modules Chromatic dispersion is a broadening of the input signal as it travels down the length of the fiber. The farther the signal travels, the more dispersion is introduced. Dispersion compensating fiber (DCF) contributes an average of 700 nanoseconds of latency per kilometer of compensated distance! In contrast, dispersion compensation modules using fiber grading technology introduce a negligible 0.15 nanoseconds of latency per kilometer. 2

3 EDFA Optical Amplifiers EDFA amplifiers compensate for lost optical power without introducing any measurable latency as light travels along the fiber-optic plant. AWG-Based Passive Optical MUX/DMUX These passive solutions, commonly used in dense wave division multiplexing (DWDM) optical transport, do not introduce any significant network latency. LOW-LATENCY SOLUTION CONSIDERATIONS Although conventional solutions can minimize network latency, they also limit the capabilities available with today s network technology. The difference between two transport solutions is whether fiber optimization and network performance is sacrificed for the sake of low latency. A network operator in the financial market needs low-latency aggregation while continuously managing and measuring the low-latency optical transport. In today s competitive environment, it is essential to assure delivery speeds down to the microsecond and sub-microsecond as well as guarantee the committed service-level agreements (SLA). Sound impossible? MRV has the solution. FIBER DRIVER LOW-LATENCY OPTICAL TRANORT Fiber Driver Optical Multi-Service Platform (OM) from MRV addresses conventional low-latency solutions and provides additional solutions to enhance performance while maintaining low -atency criteria. Fiber Driver provides the industry s lowest latency solutions for: Transparent 2R (regenerate, reshape) solutions for 1 and 10 Gigabit Ethernet Transparent 3R (regenerate, reshape, retime) solutions for 1 and 10 Gigabit Ethernet 10-Gigabit Ethernet with full performance monitoring and SLA assurance tools that enable in-service latency and jitter measurements Aggregation of 1GbE services onto 10G wavelengths with full performance monitoring that enable in-service latency and jitter measurements Fiber Driver low-latency solutions also offers easy adaptation to various distances and optical characteristics (MM, SM, CWDM or DWDM) through standard pluggable transceivers. FIBER DRIVER TRANARENT TRANONDERS FOR 1G AND 10G SERVICES - ULTIMATE LOW LATENCY Fiber Driver s transparent transponders achieve the industry s lowest latency. Being data agnostic, they do not provide any protocol-specific performance monitor metrics that measure the quality of service; they leave this task to the edge devices and servers. Some modules include additional value-added features like link redundancy, which assures the level of service without altering the ultra-low-latency performance. Fiber Driver offers two types of transparent transponder modules that provide ultra low-latency Gigabit Ethernet interconnections: Fiber Driver s 2R transponder module simply reshapes and retransmits the data signal with a committed latency specification under 2 ns through each module. The 3R transponder module retimes, reshapes, and retransmits the data signal. This module incorporates link redundancy with fast switching that is invaluable in financial markets, and it offers a committed latency specification under 10 ns through each module. 3

4 Fiber Driver has multiple types of ultra-low-latency 3R 10-Gigabit Ethernet transparent transponder modules: two using XFPs and one multi-function using SFP+ pluggable transceivers. One of the XFP-based models provides link redundancy with microsecond switching, and both have a committed latency specification under 2 nanoseconds per module. The SFP+ models offer two or four transponders in a single Fiber Driver module. These solutions provide the industry s highest density, best power efficiency, and a committed latency specification under 3 nanoseconds per module. Fiber Driver offers ultra low-latency along with network protection to eliminate service interruptions. FIBER DRIVER DMR10G TRANONDERS HIGHEST DENSITY AND MOST POWER EFFICIENT The Fiber Driver DMR10G module is a multi-rate, multi-function solution using on SFP+ pluggable transceivers. It addresses many protocols, including 10G Ethernet LAN PHY and WAN PHY, 10G SONET/SDH, Fibre Channel 1/2/4/8/10G, or Infiniband (2.5/5/10G), and it offers multiple modes of operations including dual and quad transponders per module, redundant transponder, or multicasting. With its multi-purpose capabilities, the DMR10G can be used for applications at at different locations in the network for maximized equipment investment and streamlined inventory management. DMR10G dual or quad transponder configurations increase bandwidth per chassis, packing from thirty to sixty 10G channels per Fiber Driver chassis or 80 channels in 9RU to save 50-70% space and real estate costs. Its power-efficient design and usage of SFP+ DWDM pluggable transceivers result in 0.65W-0.75W per gigabit of bandwidth and 50% to 90% savings in power consumption. With its committed extreme low latency of under 3 ns, the DMR10G is the industry s best and most energy efficient 10G transport solution. FIBER DRIVER 10G TRANONDERS FULL PERFORMANCE MONITORING AND SERVICE LEVEL AGREEMENT (SLA) ASSURANCE Conventional low-latency optical transport is transparent and data agnostic. These solutions forfeit the manageability and performance monitoring capabilities, and they leave the task of service level assurance (SLA) assurance to the edge devices. The real challenge is offering a 10-Gigabit Ethernet optical transport with sub-microsecond latency while providing full manageability, continuous performance monitoring metrics, and SLA tools. The Fiber Driver 10G Ethernet Universal Service Module (EUSM) meets this challenge with full remote management capabilities, continuous performance monitoring metrics (64-bits Ethernet and HC-RMON counters), and built-in SLA tools that enable in-service latency and jitter measurements. These advanced capabilities are delivered with a latency of 600 nanoseconds, in line with the latency of most available transparent transponders! FIBER DRIVER GBE SERVICES AGGREGATION ONTO 10G WITH PERFORMANCE MONITORING To achieve true ultra-low latency, Gigabit Ethernet services aggregation onto 10G wavelengths requires a deep understanding of the high-frequency algorithmic traffic patterns. Analysis done by the National Laboratory for Applied Network Research shows that frequent ticker data feeds and transactions produce an IMIX-like mix of packet size streams. Other research studies indicated alternative models with random packet size from 64 to 1518 bytes. The Fiber Driver Packet Multiplexer (PMUX) design is based on the high-frequency algorithmic trading traffic patterns. It optimizes the performance to an average latency of less than 8 microseconds for both IMIX and random packet size traffic patterns. The PMUX module incorporates full manageability, continuous performance monitoring metrics (64-bits Ethernet and HC-RMON counters), and SLA tools. Performance is not sacrificed to achieve low latency in the network. 4

5 Datasheet BEYOND LATENCY THE CROWDED CO-LOCATION Co-location facilities in financial centers are the most densely interconnected data centers in North America. Providers attempt to house as many servers as possible into the available space, and continuously try to optimize the power consumption required to activate and to cool the multitude of servers and transport systems. In these data centers, the ideal ultra-low-latency optical transport system occupies minimal rack space and consumes minimal power for either activation or cooling. The Fiber Driver Optical Multi-Service Platform (OM) sets the industry standard. With a footprint of under 3U, the Fiber Driver system can accommodate up to thirty 10-Gigabit Ethernet managed transparent services or up to 40 1-Gigabit Ethernet aggregated services with full performance monitoring and SLA assurance capabilities. The Fiber Driver power efficiency is well above any competitive low latency transport solution. The TEEER coefficient is a standard defined by Verizon that measures the operational and cooling power consumption efficiency of optical transport system. TEEER value represents the system energy efficiency rating on a scale from 1 (least efficient) to 10 (most efficient). Verizon has determined TEEER values for optical or video transport equipment should be better than With its TEEER of the Fiber Driver OM once again, sets the industry standard. FIBER DRIVER HIGH DENSITY 10G METRO TRANORT SOLUTION Power Efficiency Save 50-90% power consumption without sacrificing functionality! 20 Density Competitor #1 (Watt/Gb) Save 50-75% space without sacrificing functionality! MRV Solution Former MRV Solution Competitor # Competitor # 2 Competitor #2 100 LNK/ACT DD DD RS LNK/ACT DD DD RS LNK/ACT DD DD 22U RS U OK PS2 PS1 SD PS2 PS1 INPUT OUTPUT PS2 PS1 The TEEER rating is a Verizon Green System Energy Efficiency Rating on a scale from one (least efficient) to ten (most efficient). Verizon established a TEEER of 7.54 as the minimum acceptable rating for Optical Transport. While many suppliers tout ratings around 9.0, MRV improved its industry-leading rating from 9.84 to 10.55, cutting power consumption in half in the process. TEEER Rating 80-channel 10G MRV Solution Power Consumption (W/Gb) 24 11U MRV WALL STREET S DREAM COME TRUE MRV s Fiber Driver OM redefines ultra-low-latency, high-capacity optical transport for high-frequency trading networks. All these benefits come without forfeiting performance, link redundancy, or advanced manageability. MRV sets the standard by offering high-performance and ultra-low latency in the same transport platform with unique continuous performance monitoring metrics and built-in SLA assurance tools. While others talk about ultra-low-latency solutions, MRV delivers. 5

6 Ordering Information Part Number Mudule Desctiption Latency EM316-2SFP Protocol Transparent Fiber Media Module, with dual SFP pluggable optics interfaces 1-2 ns EM316DMR3G-3R Dual Multi-Rate Fiber Module, 42 Mbps to 3.2 Gbps rates, four SFP interfaces with 3R 8 ns EM316DMR10G-3R EM316-2XFP-ET Dual Multi-Rate Fiber Module, 1/2/4/8G Fibre Channel and any 10G rates Gbps, four SFP+ Interface with 3R 10G Transponder, with dual XFP pluggable optics interfaces, 10G Ethernet LAN PHY Optimized EM316-10G-XY 10G Fiber any rate multi-function module SFP+ access port and dual redundant XFP 1-2 ns EM316EA-BR1522 EDFA Booster Optical Amplifier, Protocol Independent, C-Band, nm, with Automatic Power Reduction (APR), 15 dbm gain, 22 dbm Saturated Output Power EM316DCMxxx C-Band Dispersion Compensation Module 100 km 20 ns NC316BDMXA40M 40-Channel DWDM Passive Multiplexer, De-Multiplexer, Monitor, and 1510nm OSC ns EM316EUSM-10G 10G Optical Ethernet Universal Service Module- fiber (SFP+) access ports and redundant XFP optical trunks; advanced remote management 802.3AH with MRV extensions EM316-10G8SW-XY RGigabit/10-Gigabit Ethernet multi-function module(switch/packet Multiplexer) 20 ns 2-3 ns 1-2 ns 80 ns 600 ns MRV operates Worldwide sales and service offices across four continents. Contact us at info@mrv.com MRV Communications Corporate Headquarters 300 Apollo Drive Chelmsford, MA All statements, technical information and recommendations related to the products herein are based upon information believed to be reliable or accurate. However, the accuracy or completeness thereof is not guaranteed, and no responsibility is assumed for any inaccuracies. Please contact MRV Communications for more information. MRV Communications and the MRV Communications logo are trademarks of MRV Communications, Inc. Other trademarks are the property of their respective holders. MRV-AN-FD_LOWLATENCY Rev. A2 Copyright 2013 MRV Communications, Inc. All Rights Reserved.