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In capital markets, low latency is the use of algorithmic trading to react to market events faster than the competition to increase profitability of trades. For example, when executing arbitrage strategies the opportunity to "arb" the market may only present itself for a few milliseconds before is achieved. To demonstrate the value that clients put on latency, in 2007 a large global investment bank has stated that every millisecond lost results in $100m per annum in lost opportunity.

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  • Low latency (capital markets) (en)
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  • In capital markets, low latency is the use of algorithmic trading to react to market events faster than the competition to increase profitability of trades. For example, when executing arbitrage strategies the opportunity to "arb" the market may only present itself for a few milliseconds before is achieved. To demonstrate the value that clients put on latency, in 2007 a large global investment bank has stated that every millisecond lost results in $100m per annum in lost opportunity. (en)
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  • In capital markets, low latency is the use of algorithmic trading to react to market events faster than the competition to increase profitability of trades. For example, when executing arbitrage strategies the opportunity to "arb" the market may only present itself for a few milliseconds before is achieved. To demonstrate the value that clients put on latency, in 2007 a large global investment bank has stated that every millisecond lost results in $100m per annum in lost opportunity. What is considered "low" is therefore relative but also a self-fulfilling prophecy. Many organisations and companies are using the words "ultra low latency" to describe latencies of under 1 millisecond, but it is an evolving definition, with the amount of time considered "low" ever-shrinking. There are many technical factors which impact on the time it takes a trading system to detect an opportunity and to successfully exploit that opportunity. Firms engaged in low latency trading are willing to invest considerable effort and resources to increase the speed of their trading technology as the gains can be significant. This is often done in the context of high-frequency trading. (en)
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