Real Time Remains Complicated and Costly
July 14, 2016
I love it when search and content processing vendors yammer about their “real time systems.” Years ago I did a report for a client in Europe about the costs of real time. Summarizing the six month research effort is easy: Real time is tough in computer systems. Latency exists.
To get a sense of how tough it is to accelerate certain online actions, navigate to “Legendary Hedge Fund Wants to Use Atomic Clocks to Beat High-Speed Traders.” Despite the wonky “legendary,” I noted this comment:
Patent application no. 14/451,356 [to find this puppy use US2016/0035027] has one goal: to outrun the speed demons of Wall Street. The 16-page document was quietly published by the U.S. Patent and Trademark Office in February. Replete with schematic drawings, the filing describes a novel way for “executing synchronized trades in multiple exchanges.” The invention consists of not only sophisticated algorithms and a host of computer servers, but atomic clocks — precisely calibrated to vibrations of irradiated cesium atoms — to sync orders to within a few billionths of a second.
I also highlighted:
Its invention, developed by the firm’s co-chief executive officers, Robert Mercer and Peter Brown, first sends an order to a central server, which breaks it up into multiple smaller orders. Those are then routed to venues that offer the best prices and most liquidity, much the same as brokers do now. But before that happens, the smaller orders are sent to servers located as close to the exchanges as possible, along with instructions on the precise times they should be executed. The co-located servers sync their transactions so HFT firms won’t have enough time to identify an order on one exchange and then race to another to trade against it. A crucial part of the system is the optical, atomic or GPS clocks that will be used synchronize those orders. Renaissance says in its application that GPS clocks are accurate to within nanoseconds and any time differences between them are “too small to be perceived” by HFT firms.
How much is an atomic clock centric trading system? A well heeled Wall Street firm can afford these systems. The reason is that the infrastructure to pull off this near real time approach is out of reach for many outfits.
How close to real time is a search and content processing system? You can believe the index is up to date, but I would suggest that you are looking at last week’s leftover barbeque chicken in a Tupperware box. Saying “real time” is less difficult and expensive than shaving milliseconds off an online action. Enjoy that chicken?
Stephen E Arnold, July 14, 2016
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