Velocimetrics and Napatech Team Up to Slash Trading Delays

Velocimetrics is partnering with Napatech to reduce tick-to-trade latency by addressing data and internal system issues.

Paul Spencer, COO of Velocimetrics, says firms that use its software—designed to monitor high volumes of messages delivered at a rapid pace during trading transactions—frequently encounter problems with market data delivery. The real-time performance analytics provider is able to reconstruct the trading lifecycle in real-time when data ticks, price and quotes, and a trade order has taken place on a trading venue. 

“We inform traders about how well their platforms are behaving, and therefore how competitive, from a financial perspective, their trading is,” he says. “In the event that trading platforms don’t perform well, it’s almost certain to develop into poor trading performance, financial losses, and so on, which is why it’s so important for a trading organization to depend on their trading for revenue streams. We provide a real-time view of the performance of their platforms.”

Napatech solutions have been integrated into Velcometrics’ software to enable the more accurate reconstruction of trades through the use of its capture technology, which is designed to prevent the loss of packets even during large network loads. 

The complexity of trading technology means custom hardware can make it difficult to locate where problems are occurring in the system. For traders, speed is paramount, so anything that can increase latency could prove costly to firms. Velocimetrics helps trading desks locate problems and allows them to investigate why they are happening in order to reconfigure internal systems and algorithms if necessary.

Daniel Joseph Barry, vice president of strategy and market development at Napatech, says one of the difficulties of using vendors’ technology is server problems. For instance, network cards from a standard server are not built to analyze data at high speeds, he says, so when information is being passed at 20 gigabytes, packets will be lost and none of the target technology timestamps this information. 

“If you try and take a standard Intel network interface card and use it for prime-time applications, what you find when the number of packets goes up is that you start to lose the packet, then you start to lose the data,” he says.

Napatech provides high-stability clocks for timestamping, which was the primary reason the technology was chosen, according to Spencer. Timestamping the data allows for accurate latency measurements that are conducted at nanosecond speeds.

“With precise timestamping, the technology would then be able to map that in the infrastructure in the trading environment, allowing the client to go in and analyze what is happening at a very granular level,” says Barry. “The key thing for one firm was that they were experiencing this end-to-end hundred microsecond delay, but they just didn’t know where the source of this delay was, and by providing very granular visibility and very precise timing, they were able to go in and fix it.”