Reducing latencies with FPGA

In this section, we will look at the Field Programmable Gate Array (FPGA), investigate the evolution of the fierce competition of speed in HFT, and then discuss the motivation for using FPGAs in modern HFT. We will also explore how an FPGA itself works, the design of an FPGA-based trading system, and the advantages and disadvantages of using FPGAs in HFT systems.

Evolution of the fierce competition of speed in HFT

As we have seen in this book, HFT has received a lot of attention, become extremely popular, and also grown to become a significant component of all financial market liquidity and trading. We have also seen that HFT (as the name implies) is all about speed/latency – the speed at which HFT systems and algorithms can analyze market data information, send order requests, and execute trades.

To summarize, latency refers to the total time to travel from one point to another for a data packet. However, specifically in trading, latency...