As high frequency algorithmic trading becomes increasingly prevalent across the world’s stock markets, demand has been constantly growing for faster connectivity between the major financial centers.

In a bid to satisfy some of this demand, the UK firm Exponential-e recently upgraded its international network so that round-trip latency times between Frankfurt, London, New York and Chicago have been cut considerably. For example, it is now possible to send financial messages from London to New York and back again in just 67.8 milliseconds (that’s thousandths of a second), a figure that was previously unheard of.

Why is this important? Well, for a high frequency trader, it is all about speed of execution. If you can send an order to an exchange and receive your execution back faster than your competitors, you stand a much better chance of profiting from that transaction.

Exponential-e, based in the city of London, has optimized its network specifically for high frequency traders, with connections to all the major exchanges, trading venues and financial data centers, in all four locations mentioned previously.

Trading Floor @TSE

The firm is not alone in its provision of such services however. There are a number of other providers seeking to capitalize on the growth of high

frequency trading by offering similar network services. Firms such as Atrium Network, Savvis and Radianz are also bringing their round-trip latency figures down between the major financial centers.

The Future of High Speed, High Frequency Trading

Although it is a competitive market for these next-generation network providers, the demand for such services doesn’t look like it is going away any time soon. High frequency trading now accounts for 70% of all US equities volume according to some estimates, and the volumes are growing rapidly in Europe and Asia too. In fact, just last week, Singapore Exchange announced a $250 million upgrade to its trading systems and supporting infrastructure.

High speed trading demands high speed technology and there is no shortage of high-tech firms competing with each other to supply that.