SunGard has launched an ultra low-latency direct market access (DMA) service for pan-European equity markets through its European broker-dealer, Valdi Execution Services. Valdi is aimed at the low-latency requirements of high-frequency traders, providing a broker-managed solution that includes clearing and settlement.
SunGard's Valdi Execution Services is designed to minimise the latency for an order being sent to a venue, and Dave Mishoe, managing director for the trading division of SunGard, claims that clients using the services have seen speed to venue increased by 2-300 times.
“We built our pre-trade risk layer into the DMA platform so there is no additional hop layer for clients,” Mishoe told theTRADEnews.com. “This is not a node on an order routing network, it supports low latency access direct into the market from a centralised deployment.”
The system has been in use by an unnamed number of clients for several weeks and Mishoe hopes to have the majority of Valdi Execution Services clients on the platform by year-end. Currently it connects to the BATS and Chi-X multilateral trading facilities (MTFs), and access is expected to be extended to MTF Turquoise and the London Stock Exchange, as well as other pan-European markets in the near future.
Customers can connect directly to the service's FIX application programming interface for high-speed connectivity. The DMA access infrastructure is centrally deployed, and exchange co-location and distributed infrastructure are also available to help decrease latency and increase time-to-market.
In Europe, research firm Aite Group estimates that the current 25% volume share of high-frequency trading will reach over 40% by 2012, and that the adoption of algorithms and DMA is expected to increase to 70% during the same period. The introduction of Valdi Execution Services' European DMA offering is expected to help latency-sensitive firms reduce the time-to-market and infrastructure burdens that most firms encounter when entering new markets.
In the US, regulators brought in a rule
on 4 November enforcing use of pre-trade risk management, which is expected to make the offering of low latency pre-trade risk management services increasingly competitive.