Examining the Latency Race, Data Management, and Connectivity at The Trading Show Chicago
This panel discussion dove deep in the heart of the HFT debate concerning the validity of speed, its tradeoffs, and what is needed for an HFT system. The moderator for this session was Daryan Dehghanpisheh of Intel Corporation. His interests not only include technology, but also teaching at charter schools and searching the world for exotic foods.
The first question discussed by the session was an inquiry into the cost of getting into the business. Arzhang Kamarei of Tradeworx, Inc. stated that the barriers of entry have come down due to third party vendors. John Page of Boston Options Exchange agreed and added “The cost is cheap for software toolkits and off-the-shelf technology but the cost comes in on the strategy side and adding all of it together.” Larry Pitcher of QUANTORITHMS answered the question from a network perspective, “From a spend side, the connections are not expensive but there are some components that would require specialized attention and your likely to spend more money there.”
Given that some members of the HFT community are on the “race to zero”, the next question was right in line with cost versus return when speeds are extremely fast. Mr. Dehghanpisheh asked, “Is the incremental cost worth it?” Mr. Goode answered, “There is a natural limit to about 50 – 100 ms, everyone will be there. Execution quality will be the divisor. Alpha driving will have speed as the base cost.” Mr. Kamarei’s response agreed with Mr.Goode’s and added some perspective, “As people’s speeds will converge, is the latency advantage an edge or a cost (like a tax) to participate?”
Speaking of advantages, the next inquiry posed was where to find balance in terms of what the shops are looking for in the smart vs. speed debate? Mr. Page responded "We are a small shop and have some budget challenges, we don’t need any more traders. … What we look for is a basic technical background, smart, flexible, and hardworking person.” Mr. Goode focused the response further by stating, "There is not an oversupply in technical skills … Typically, the best ones are well versed with Linux and Open Source.” To support this statement, there was some consensus throughout the conference that it is hard to find talent that has experience working with large data (graduating students should take note). Mr. Kamarei’s response provided a fresh perspective on talent acquisition. "In terms of finding talent, the market is better now than two years ago … finding new people is the challenge and we all have to contend against consulting, other financial firms, and now Internet companies like Google and Facebook.”
To close the session, the panel role reversed with the moderator and asked Mr. Dehghanpisheh the broad question of where Intel sees the technology going. “The cost structure of the business is changing which opens new opportunities but regulations are the biggest constraint.”
-Original content provided by Safraz Rampersaud, an on-site blogger at The Trading Show Chicago
