Nasdaq Cuts Order Processing to 250 Microseconds
September 9, 2009
Nasdaq said Wednesday that a series of technology upgrades that it had completed now allowed it to process an order in 250 millionths of a second, down from 400 millionths six months ago.
The upgrades, which use the system’s next-generation of trading technology called Inet, could make it the exchange with the lowest latency in processing an order. The BATS Exchange, which also operates wholly electronically, reported its average latency in June at 395 microseconds, or millionths of a second. Its “normal-case” latency was 320 microseconds.
Nasdaq said its upgrades have been implemented on most of its own exchanges and soon will be available to technology customers. Trades will also be posted nearly at the same time.
“Orders are posted on our market data feed at almost the same time, [single-digit] microseconds apart,” Anna Ewing, Nasdaq’s chief information officer says, adding that in a few weeks the exchange will begin regularly posting the statistics for order and data-feed latency.
The BATS Exchange will wait until Nasdaq posts its results publicly on its Web site, before accepting that its rival has lowered the bar in latency, said BATS vice president Randy Williams.
Nasdaq defines latency as the time for an order to leave a market participant’s server on Nasdaq’s firewall and either be accepted, rejected or filled by the exchange’s matching engine, and the customer alerted to the outcome. BATS uses the same definition. Since BATS was launched in 2006, the two exchanges have battled for the low-latency title.
NYSE Arca, the other major fully electronic U.S. exchange, reported in May—its most recent numbers—that over the previous two months it had dropped its order “response time” to under a millisecond, or one thousandth of a second. That is down from two milliseconds.
Its sister New York Stock Exchange, which still has floor traders, said in July that its newly implemented NYSE Super Display Book system gives customers executions and reports within five milliseconds, down from 105 milliseconds previously, and order and cancellation acknowledgements within two milliseconds.
NYSE Arca runs off the technology originally created by Archipelago ECN, an electronic communications network NYSE acquired in 2005. Nasdaq acquired the Inet ECN later that year, and it has implemented the technology throughout its own U.S. holdings, such as Nasdaq OMX PHLX, formerly the Philadelphia Stock Exchange.
Ewing says Sweden’s OMX, an operator of several Nordic exchanges that Nasdaq acquired last year, is schedule to adopt the INET technology, and the upgrades, by year-end.
She adds that Nasdaq’s 70 exchange customers using its technology platform will have the upgrades available to them when its new Genium commercial offering is launched in the “coming weeks.”
