The Blog of James: How much has your firm invested in reducing latency? (Poll Results)
The February poll, addressing spend on reducing latency, at Low-Latency.com reaffirmed two platitudes that stand the test of time - the “80/20 rule” and “either you have it or you don’t”. See the graphic below.
As one A-Team client observed, there is a clustering of respondents “around” the $1 million mark and another at over $10 million. Nearly 20 percent of respondents - those that “have it” - have invested over USD 10 million in reducing latency either in improving legacy systems or designing new systems to address the problem from the ground up. That’s a phenomenal amount of money!
Meanwhile, some 63 percent have spent less than USD 1 million and just under 20 percent are in the USD 1-5 million range. Combined (and allowing for some interpretation of a possible average), just over 80 percent of respondents have spent only a million. I say only a million - but that’s still a lot of cash if one considers a focused spend on a single goal - reducing latency. But, it is a paltry sum lost in the cost of the entire infrastructure (hardware, software, and staff) at a typical sizable bank (or other investment firm).
Further research has discovered that the largest banks aren’t necessarily spending as much as you might expect - they don’t yet see themselves as needing to be in the low-latency “arms race” that seems to be all the rage. Sure, they care about being responsive to the markets but these banks tend to think in terms of hours, days, or even weeks instead of sub-second arbitrage of a (seemingly) random opportunity. No, for them, they would rather ride the wave and make sound decisions over time.
But there are those that want to split the microsecond. In most cases, that’s an expensive proposition. In some, a little bit of cash invested well has reduced latency and positively affected operations. Are these the same firms that are turning green - finding a way to save money while improving responsiveness? Or, are these organizations able to claim the savviest tech team in the industry?
