This question occurs to me because it’s top of mind with Charlie McCreevy,
the European Commission and also many of the discussions taking place today in
Paris at a tradeshow focused upon investment banking. Buy and sell side firms have gathered to
debate algorithmic trading, dark pools of liquidity, multilateral trading
facilities (MTFs), smart order routing, the credit crisis, low latency and
To set the context, we begin by talking about technology and it amazes me how
blasé we have become about technology. For example, the investment banks talk
about low latency, but what does it mean in practice?
Well, the new equities exchange Chi-x claim to process a trade in two
milliseconds. How fast is two milliseconds? A human blink is meant to take 200
milliseconds – don’t ask me who measured that one – and therefore Chi-x
processes orders in a hundredth of the time it takes you to blink your eyes.
That’s low latency.