Video Game Industry “Subsidizing” Wall Street Technology
December 9, 2009
Forget getting your servers into the same facility where exchanges locate their matching engines for securities trades.
Depending on how cross-connects between machines are set up, you can introduce the kinds of micro- and millisecond delays that will make those matching engines think you are hundreds of miles away, said Deborah Mittelman, director of product for U.S. Equities at Lime Brokerage at a breakfast session on high-frequency trading held Wednesday by the Capital Markets Consortium. If you are going to co-locate, Mittelman said, you need to ensure that you have done so in the most effective way possible.
Co-location of servers with matching engines is not where it’s at, said consultant Carl Carrie, former head globally of algorithmic products and high frequency market making at JPMorgan.
“The most engineering ingenuity,’’ he said, “is being embedded in silicon.’’
And that silicon is not general purpose processors, used for basic office tasks. Rather, they are field-programmable gate arrays, used widely in the video game industry to process rapidly changing graphics, action, sound – and player instructions.
That means, for instance, that in high-frequency trading, which now accounts for an estimated two-thirds of all equities trading in the United States, the main maker of microprocessors, has left the FPGA race to Nvidia, the dominant producer of graphics processors for video gamers, said Carrie.
Other big players are Pico Computing, Xilinx and XtremeData, Carrie said. They are producing complex processors that help securities firms make Value at Risk calculations and pull in huge amounts of market data from feed handlers, to support decision-making. “Typical processors running (programs written in) Java or C++ (can’t) run at the same speed,’’ he said.
The video game industry is now a $21 billion business in the United States and twice that worldwide.
“The financial services industry has been extremely fortunate because all these advances,’’ said Irene E. Aldridge, managing partner of Able Alpha Trading, “were actually paid for by the video gamers who demand this technology and were actually subsidizing a lot of the development that we currently see on Wall Street. Because those guys they really want the cheapest, the fastest and the bestest out there, and we’re just sort of derivative beneficiaries.
“I hope it continues that way,’’ she said.
Meanwhile, Intel, the maker of the most widely used “multicore” processors found on Wall Street, may get back into the FPGA game for high-frequency trading. By buying Nvidia.
