HFT Firms Turn to Co-Location to Gain Competitive Advantage

By Suresh Aswani, Senior Manager, Solutions Marketing, Hewlett Packard Enterprise

March 20, 2017

High-frequency trading (HFT) is a high-speed, high-stakes world where every millisecond matters. Finding ways to execute trades faster than the competition translates directly to greater revenue for firms, brokerages, and exchanges.

Today’s traders look to exploit even the slightest speed advantages in order to improve their access to up-to-the-minute market pricing and reduce order processing times, and co-location is one of their primary tactics. HFT firms position their servers in the same data center as the exchanges, enabling them to access market data feeds a few milliseconds before the rest of the investing community and achieve the lowest possible levels of latency.

Co-location has become so popular that the worldwide co-location market is expected to generate $36.1 billion in annual revenue by the end of 2017, up from $22.8 billion in 2015. This demand for co-location space is prompting exchanges to rapidly expand the size of their facilities and charge high premiums for such sought-after data center real estate.

Selecting the right hardware becomes important when considering a co-location deployment. Here are some factors to consider:

  • Particularly when space comes at a high premium, a small footprint is crucial to economize on space. High-density HPC servers not only offer significant capital and operating expense savings but also pack a lot of performance and workload capacity into a small area.
  • Energy-efficiency. Hardware configurations right-sized for the standard power capacities of exchange co-location facilities allow for easy deployment, while energy-efficient server platforms boost cost savings.
  • Flexible server configurations promote easy co-location or space-constrained deployments, and enable firms to select an HPC cluster that satisfies their needs and co-location budget.

The HPE Trade and Match Server family is designed to allow firms to easily take advantage of co-location services. The HPE Apollo 2000 System is density-optimized and purpose-built to fit within a traditional data center environment, meaning firms can streamline their co-location efforts while gaining the processing power necessary to execute more quickly than the competition.

Co-locating within an exchange data center allows HFT firms to significantly reduce latency and speed order processing, however selecting the right hardware for a co-location deployment is crucial. Follow me on Twitter @sureshaswani2 for more tips on HPC trading solutions that can help HFT firms survive and thrive in the financial services industry.

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