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Emerging from post-dotcom meltdown, a clear trend has emerged in the stock market: program trading. One longtime market information provider, HyperFeed Inc., looks to ride this change with its updated ticker data platform and API.
Program trading is a term used to describe a type of trading in securities based on relationships between a stocks price and some other variable (or combination of variables). The trades are not triggered by fundamental data, such as an individual companys earnings, dividends, or growth prospects; or, on any overall economic reasons such as interest rate movements, currency fluctuations, or governmental or political actions.
Program trading requires reliable data delivered with as little delay as possible. The delay between the time the data are generated and the time a trader receives it is called latency. Three major factors contribute to latency: propagation delay, transmission delay and processing delay.
Enter HyperFeed, which offers products designed to speed up the delivery of clean, accurate data. Their ticker plant, which brings data in directly from exchanges, cleanses and normalizes it at the end users site, can remove quite a bit of the latency introduced by vendors such as Reuters, giving customers an edge.
Typically, traders obtain data from vendors who take the feeds from exchanges, then cleanse and normalize it, then ship it out in a ready-to-use format. This process can add a lot of latency, delaying the time between the moment a trade takes place and the time an end user is informed of the trade.
Since transaction data is primarily what feeds the programs that generate automated trades, any delay can harm the trader. The end users are charged based on the number of information requests they make to the data vendor, plus they pay fees to the exchanges for the use of the data.
“Financial markets need technology to attain a step up,” said HyperFeeds president and chief executive officer Paul Pluschkell. “If you have a technology that speeds your connection to the market and helps you execute your transactions faster than your competition, thats a huge advantage,” he said.
HTPX, HyperFeeds next generation high performance ticker plant platform, contains two major components: HVAULT, an enterprise-class ticker platform, and HBOX, a client site ticker plant server. HVAULTs data switch design supports over 100,000 inbound messages per second, and interfaces with all internal modules for efficient message transfer.
Next Page: HyperFeed repositions its product strategy.
New Product Strategy
The data cache stores multiple data and instrument types, such as records, pages, and news for equities, futures, options, foreign exchange and others. HVAULT creates hybrid multicast data streams from real-time and fundamental data types.
HBOX is an intelligent receiver for HVAULT-normalized multicast data streams, and supports more than 200,000 out-bound messages per second. The platform is scalable and allows end users to add more servers as needed. HBOX runs on Blade Servers and uses the same technology and components as HVAULT.
Components can be designed for customers needs. Typically HTPX is deployed for larger financial institutions. One recent new HTPX customer is the NASDAQ, which will use HTPX-managed data to feed its products. Consolidators and application providers may choose HTPXm, which is a hosted and managed solution.
Its lower cost but adds a fraction of additional latency to the data stream. HyperFeed also offers DDU, a direct data utility model, aimed at small to medium financial institutions and hedge funds.
Pluschkell says, “We offer a direct exchange with real-time data cleansing. Cleansing is a big chunk of the cost of obtaining market data, but due to HyperFeeds history of being a content provider, we think were unique and well-positioned to serve our customer base.”
HyperFeed was a data provider until recently, selling off PCQuote to Money.net last year. “We now offer enterprise-class service for customers who want everything from zero latency to delayed quotes,” states Pluschkell. “Were now a utility company and no longer supply data.”
HyperFeeds repositioning strategy reached fruition in the fourth quarter of 2003, when it sold its consolidated data vendor business to Interactive Data. In preparation for that, HyperFeed discontinued its development of trading applications, divested its Internet subsidiary, PCQuote.com, and signed several long-term, multi-million dollar contracts with leading financial firms for support of its new technology licensing business model.
By focusing HyperFeeds efforts on its ticker plant technologies and divesting less profitable product lines, Mr. Pluschkell broadened HyperFeeds potential customer base to include ex-competitors.
HyperFeedss API is an open industry standard and is compatible with many application providers. Its in use at the Chicago Board of Options and the Philadelphia Exchange.
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