Trading technology provider ALGO Technologies has launched ALGO M2, a matching engine for execution venues with a mean roundtrip latency of 16 microseconds.
Exchanges, multilateral trading facilities, broker/dealers and internalisers will be able to license the new system from 24 May, when ALGO Technologies launches its global exchange services business.
The latency figure quoted for ALGO M2, which was verified by fellow technology firm Corvil’s CorvilNet latency measurement tool, makes it the fastest trading engine available in Europe. The next-fastest system is global exchange group Nasdaq OMX’s INET matching engine, which has a roundtrip latency of 250 microseconds.
Roundtrip latency refers to the time taken from a customer sending an order to receiving acknowledgements or trades back from the venue. The latency is measured at the point between the exchange firewall and the client’s trading engine. ALGO Technologies said the internal latency of the ALGO M2 system is 500 nanoseconds.
CorvilNet measured ALGO M2’s external rountrip latency by sending over 300,000 messages per second across multiple stocks and client connections. According to ALGO Technologies, the entire European market currently only generates 75,000 messages a second.
ALGO M2 is capable of handling 320,000 orders a second and 180,000 fills a second running at its stated latency. It has the mathematical capacity to process two million messages a second.
The firm also claims the system is highly scalable, has no single point of failure, with real-time switching between primary and secondary data centres, supports thousands of simultaneous client connections and is specifically designed for the post-MiFID market.
ALGO M2 incorporates built-in risk checks for sponsored access, integrated distribution of symbol data and tick tables, and integration with compliance and monitoring tools.
“Many legacy exchange systems are up to 20 years old while most of the current fastest trading engines date back from design principles introduced by ECNs in the US well over 10 years ago,” said Hirander Misra, co-founder and CEO of ALGO Technologies, in a statement. “We’ve taken a fundamentally new approach to matching engine construction and built a new trading system from first principles to put an end to the latency debate. Users of matching technology have previously been offered legacy technology at premium rates for far too long.”
Misra added that ALGO M2 is extendable into other asset classes beyond equities and exchange-traded funds, and suggested that its matching speed might be particularly well-suited to options trading.
Misra, formerly chief operating officer of multilateral trading facility Chi-X Europe, launched ALGO Technologies with co-founders Dr. Rami Habib and Alexei Lebedev. The firm is co-owned by Misra, Habib, Lebedev and US technology provider and high-frequency trading firm ALGOEngineering. The firm plans to offer a range of execution tools, including low-latency market data, direct market access and smart order routing.
It launched a joint-venture trading network company, AlgoSpan, with fibre-optic connectivity firm FibreSpan last week.