Yamini Kannan
Dharika Kapil
- Network Engineer, Department of Computer Science, New York University, New York, USA
- Software Developer, Department of Computer Science, MarketAxess, Hudson Yards, United States
Abstract
This paper provides an in-depth examination of the critical role that high-speed networks play in the operations of high-frequency trading (HFT) firms. High-speed networks, characterized by their low latency and high bandwidth, facilitate the rapid, efficient transmission of massive quantities of data, a capability that is vital to the success of HFT strategies. We explore the core infrastructure that enables high-speed trading, from high-performance servers and switches to network interface cards and time synchronization devices. Additionally, we delve into the specifics of low-latency switches and multicast networks, discussing their advantages, challenges, and their application in an HFT context. An overview of emerging technologies and trends such as artificial intelligence, machine learning, 5G networks, quantum computing, and regulatory changes that could potentially shape the future of high-frequency trading networks is also presented. This paper serves as a comprehensive reference point for understanding and evaluating the impact and future scope of high-speed networks in high-frequency trading.
Keywords: High-Frequency Trading, Algorithmic Trading, Low-Latency Networks, High-Performance Servers, Multicast, Network Interface Cards, Artificial Intelligence in Trading, Edge Computing, 5G Networks
[This article belongs to Journal of Communication Engineering & Systems(joces)]
References
- Borch, C., 2016. High-frequency trading, algorithmic finance and the Flash Crash: reflections on eventalization. Economy and Society, 45(3-4), pp.350-378..
- Rumble, S.M., Ongaro, D., Stutsman, R., Rosenblum, M. and Ousterhout, J.K., 2011. It’s time for low latency. In 13th Workshop on Hot Topics in Operating Systems (HotOS XIII).F.
- Chen, S. and Nahrstedt, K., 1998. An overview of quality of service routing for next-generation high-speed networks: problems and solutions. IEEE network, 12(6), pp.64-79.
- Sanguankotchakorn, T. and Kongkriengkrai, T., 2009. Performance of IP Multicast in MPLS using PIM-SM (Protocol Independent Multicast-Sparse Mode). IJCSNS, 9(1), p.368.
- Egger, D.J., Gambella, C., Marecek, J., McFaddin, S., Mevissen, M., Raymond, R., Simonetto, A., Woerner, S. and Yndurain, E., 2020. Quantum computing for finance: State-of-the-art and future prospects. IEEE Transactions on Quantum Engineering, 1, pp.1-24.
- Gomber, P. and Haferkorn, M., 2015. High frequency trading. In Encyclopedia of Information Science and Technology, Third Edition (pp. 1-9). IGI Global.
- The Ultimate Guide to VoIP: Revolutionizing Communication in the Digital Age. Blydget. 2023. Available from: https://blydget.com/the-ultimate-guide-to-voip/
- Orhan Ergun. High Frequency Trading – HFT Networks. Orhanergun.net. OrhanErgun.net; 2023 . Available from: https://orhanergun.net/hft-high-frequency-trading
- Cloud. Cloud Network Latency: 5 Factors to Consider – Logical Front, LLC . Logical Front, LLC. 2023. Available from: https://logicalfront.com/cloud-network-latency-5-factors-to-consider
- What is Private 5G? | Glossary . Archive.org. 2022 . Available from: http://web.archive.org/web/20230601115953/https://www.hpe.com/no/en/what-is/private-5g.html
Journal of Communication Engineering & Systems
| Volume | 14 |
| Issue | 01 |
| Received | February 8, 2024 |
| Accepted | March 4, 2024 |
| Published | April 5, 2024 |