FPGAs making inroads in finance
One could say that high-frequency traders survive on speed. That's certainly true, but it may be more accurate to say that they survive on the second derivative, acceleration, as opposed to velocity.
The fact is that the key to survival is not just velocity by the increase in velocity that firms can achieve relative to competitors. In their quest for acceleration, many technology firms have hit upon field-programmable gate arrays as a way to harness hardware for high-frequency trading, essentially optimizing trading processes at the network level. This concept is still fairly new, but we're seeing more vendors tap the potentially lucrative financial market.
A good example is BittWare, which is known more for its services in the military, telecommunications and instrumentation industries. Lately, it has jumped into the financial market, catering to high-frequency trading technology outfits. Bittware CEO Jeff Milrod said in a recent interview with High Frequency Traders that, "Without naming names, I can tell you that we've been approached by around a dozen fairly big name companies. Most of those are very large and well-known financial services companies who want to leverage our building blocks for their innovative solutions. In addition, there have also been other financial organisations that we weren't previously familiar with. Quite frankly, we've been fairly overwhelmed. It's unusual for a company to be blindsided by a market opportunity they didn't even know was there."
As of now, "it's such a new area that there is no real consensus on the 'right' way to use FPGAs in high-frequency trading." But many are searching for the perfect solution.
- here's the interview