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Latency, location and connection
Started:March 15th, 2015 (04:46 PM) by Jking556 Views / Replies:1,134 / 11
Last Reply:March 24th, 2015 (08:50 PM) Attachments:1

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Latency, location and connection

Old March 24th, 2015, 08:03 PM   #11 (permalink)
Market Wizard
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Jking556 View Post
It is my belief that the ICE Europe brent exchange is based in London?

sam028 View Post
AFAIK it's ICE Europe and London for the Brent.

I believe that is incorrect. I think you will find that the ICE Brent matching engine is at Equinix/Cermak in Chicago.
While this may seem illogical you need to think back to ICE's root's. They originally launched as an OTC Metals & Oil trading system but only became successful several month later when they also launched OTC US Power & Gas. When they bought the International Petroleum Exchange ("IPE" home of the Brent & Gasoil futures contracts) several years later, the IPE didnt have any electronic trading system, so I believe electronic trading of Brent was implemented on their current inferstructure in the US which also gave it the advantage of proximity to Globex. With their acquisition of LIFFE in London this could obviously change but I suspect that the proximity to Globex will keep it in Chicago. Saying that there is a rumor that they ("ICE") may be moving everything to New Jersey where the NYSE matching Engine's are. This is probably the scenario that makes them the most money.
Maybe @artemiso can confirm their location and comment on the NJ rumors. He seems to be the most knowledgeable on things like that here.

Jking556 View Post
I ask this because my internet connection takes 30ms to hit a server in London. Whereas it takes 125ms to hit one in America. This to me suggests I would be better off trading Brent in the UK rather than WTI on the Nymex?

What type of trading are you doing?
If it's point and click colocation probably won't help you much. The prices/info still have to cross the atlantic for you to react/click on them.
If it's any form of automated strategy/autospreader etc then colo will probably make a huge difference, depending upon how latency dependent you are. (Autospreader - High, High/Med Frequencey Scalping - High, Low Frequency Scalping - Med, Automated EOD trading strategy - Low).

Jking556 View Post
Cqg is direct market access, it's my belief that my order goes straight to the exchange and wouldn't have to be routed to AMP in America and then sent on the exchange, is that correct?

sam028 View Post
From what I know you will have some network latency for orders, as the risk management is made in USA for CQG (but there are some pricing/orders servers in London).
CQG may have direct access but not you and your "retail" AMP/CQG account.

Koepisch View Post
If you look at the CQG infrastructure then it seems that everything is maintained within their servers. The brokers can lease the risk management services from CQG.

DMA is exactly that. It's direct market access. If your talking or checking with another system, going through another server it's not DMA. DMA is normally pretty expensive because you have to pay the exchange for a private data feed. In my experience this is upwards of $1000/month/exchange. As @sam028 said "CQG may have direct access but not you and your "retail" AMP/CQG account."
For what it's worth I looked at CQG several years ago, but passed. At the time everything went through their infrastructure. Hence even if you were colocated you were still waiting for messages/prices to go through their infrastructure before it got to you. I don't know if that's still the case - something I read recently implied it wasn't but I'm not a user so am not sure.

sam028 View Post
Not really, that's not that simple .
The broker can be from whatever country, but every network communication has too be UK based if you want to have the lower possible latency.
There are basically 3 main things to check:
- price feed: where the price coming from, which exchange(s) and where are the "relay" (CQG London for you I presume)
- risk management server: before sending an order to the exchange it has to be "valided" (do you have enough margin, are you allowed to trade this instrument, and so on). From what I know this is done in USA for CGQ, at least for now.
- order feed: to which location is your order sent (CQG London) after it's validated

+1 all of this.
I would add that it's quite possible to get all three of these at the same place. Not familiar with CQG but I know with TT Risk and Credit functions are performed at the TT Gateway which is connected to the exchange feed. If the broker wants to change/check risk, they log onto the Gateway. Nothing has to be sent to them first.
Note that a common trick to reduce the latency of the credit and risk check is to send an off market order, and then change the order to the price you want when you need it. The initial order is credit/risk checked but the price change isnt. You probably need to be pretty advanced though to be taking advantage of that - I know I'm not.

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Old March 24th, 2015, 08:50 PM   #12 (permalink)
Elite Member
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SMCJB View Post
Maybe @artemiso can confirm their location and comment on the NJ rumors. He seems to be the most knowledgeable on things like that here.

@SMCJB is correct. ICE Europe's matching engine is in Chicago.

Last edited by artemiso; March 25th, 2015 at 12:18 AM.
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