Low-latency connectivity is a hot new Ethernet app

CEN Feature (May 18 2010)

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   One of the hottest applications for Carrier Ethernet today is low-latency connectivity. The new low-latency services target the unique needs of the financial industry, where companies increasingly are making high-speed trades based on automated algorithms.

   There’s always been money to make buying and selling financial products at the right time. Algorithmic trading takes that concept to the extreme based on miniscule movements in the price of a security—executing trades, quite literally, at the speed of light via high-speed wavelength or Ethernet private line connections. To support this new trading model, it’s critical for these high-speed connections to offer the lowest latency possible. A few additional milliseconds can have a major impact on how quickly a trade is executed, which in turn, determines its ultimate profitability.

   A critical route is the one between trading engines in New York and Chicago. Carriers such as Level 3 Communications and Intellifiber Networks have devoted considerable attention and resources to optimizing their fiber routes between these two key markets to reduce round trip times by precious milliseconds. But the payoff is worth it. According to Intellifiber Vice President of Sales Operations Gabe Venturi, a carrier that offers low-latency connections can charge as much as seven times the market rate.

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