Helping Traders Profit - Proximity Hosting and Low Latency Lines


Trader Profitability - the Case for Managed Services



The CFTC, Low latency Lines, and Proximity Hosting - Where Do They Intersect

Managed Services, particularly proximity hosting, bears the light for most traders following the announcement by the Commodities Futures Trading Commission (CFTC) of the publication of rule specifying the various requirements for the contract markets and derivatives transaction execution facilities; as well as commercial markets exempted from the same rules listing price discovery contracts (prominently known as exchanges) and offering proximity hosting services or co-location to the various market participants.

The CFTC rule enables traders to have equal access to the market, be charged the same fees while also promoting latency transparency and also a provision for third party proximity hosting services providers. As long as you are a qualified market trader having met the laid down rules and regulations, you get to enjoy the activity of the formalized market without much to take home as the profits are more or less limited. The main reason for limited profitability is quite simple - increased regulation that seeks to cushion unsuspecting traders from exploitation.

The low latency lines are meant to ensure that all latencies may it be long, average or short connectivity latencies; are well available to the public domain this will ensure that the public have the same information the prime brokers have as well as the banks hence limiting the profit margins for any trade. A well informed population of traders will likely have the same kind of information and hence the decisions as to whether to sell or buy will rarely be based on speculation.

While this will work well for those who don’t do their homework before putting their money in an investment, it will probably limit the extent to which the very bright can curve out enormous profits. Nevertheless, the proximity and co-hosting services are not being offered free of charge; all those willing to capitalize on the services are ought to pay for them and hence limiting the traders’ profitability margins. From a different point of view, the fact that fees regulation is put in place can be seen as way of making it a level playing ground as the rule will suggest; barring all other factors. It will be right to say that the rule seeks to prevent some traders from being priced out of the market.

This type of information circulation is well enhanced by the provision that allows exchanges to obtain third party transactions information. This will give the exchanges the information about the market participants as well as their systems and even other information relating to third party transactions that will be good enough to undertake self-regulatory obligations

FCM360 provides Low-Latency Trading Infrastructure for Automated Trading, Algorithmic Trading, High Frequency Trading as well as Managed Trading System Hosting and Exchange Connectivity. By utilizing FCM360 services, our clients are allowed to focus on their core business which is building client relationships, trade execution services and generating revenue. By having turn-key technology solutions for your trading clients you will enhance the recognition and value of your brand.