MiFID is on everyone’s mind, buy-side, sell-side, and exchanges - or should we say market liquidity. But what is the City’s response so far, and what is Intel doing to support infrastructure developments? Nigel Woodward examines the current state of play.

Nigel Woodward Financial Services Director UK Intel

Welcome to the first issue of Intelligence in Finance – Intel’s new quarterly newsletter covering important topics across our activities in the financial services industry.

A new departure I hear you say, struggling to connect Intel’s infrastructure technology with the developments of the market. A challenge I agree, but over the next editions, we will highlight the key issues we are addressing in shaping the markets’ evolving technologies.

Today we are all inundated with blogs, websites, traditional printed titles and their web offshoots and various vendor newsletters. In this newsletter we hope to give you new insight on the market. In this introduction I want to give my personal perspective. Ongoing we will have regular columns giving you foresight of our deepest R&D activities, comment from key partners where we see particular innovation, news on major projects, what’s happening on our events horizon and summaries of key papers we know are available.

In the next months, Intel will be focussing its efforts on some key market initiatives. At SIBOS last year our attention was on the supply chain and this year we continue to focus on areas where new technologies have the potential to change the operational paradigm of how “things are done”. High Performance Computing developments are aligned to risk computation. However, top of the agenda right now is the performance race and where it matters in financial services – trading and low latency.

This newsletter takes trading as its theme – highlighting a number of developments that we see.

We are now in the year when MiFID becomes law. If you are fed up with hearing about it, apologies, but it isn’t going to go away. In fact we are hearing more and more pertinent commentary on what must be done. In my view, Projects BOAT and Turquoise are responses to a new market-wide operational regime. Equiduct and FixNetix reflect a new open market of reduced technology barriers to entrants laying down the performance gauntlet with more efficient and effective operational structures – designed from the outset to meet the open, competitive mandates intended by the new regulations. These initiatives are driving the demand for low cost, high performance technologies, and Intel is investing and restructuring to ensure we are in the best position to meet these demands.

We are working at every point in the trade’s “round trip”. Everybody has an opinion on low latency, but it is only when the challenge is taken across the board that one can identify all the (moving) parts to the equation of performance edge. We used this concept to launch Intel’s new Quad Core processors last November. The Intel® Xeon® 5300 processor, known to many under the code name Clovertown (and its dual core family member Woodcrest) on the now renowned new Intel® Core™2 Duo micro architecture, arrived in the market to applause with phenomenal benchmark results. Many parties experienced upwards of 50% performance improvement – and those adventurous enough to delve beneath the covers in Intel’s labs were able to extract further gains from fine tuning the applications using tools and accelerators.

Today we are looking at unprecedented levels of cooperation. From networking, proximity hosting and application tuning, to the architectural selection of partner-based software to optimise the base level infrastructure on which trading applications are built and the use of Intel’s range of acceleration tools - all of these methods can be used to effectively turbo charge trading throughput, essential for competitive advantage in “stat-arb” and sought after across the spectrum of front office functions. To bring this together there is no alternative but to embark on engineering. Out of the box product is not enough. Intel is now bringing together its capabilities to create the Low Latency Lab – in which unique combinations of the markets’ technology can be tested to find the optimised route through both massive middleware choice and vendor marketing promises.

This lab will combine with MiFID and the maturing of JWG-IT’s research into the Special Interest Groups to provide an environment in which new operational scenarios can be scaled and tested to ensure both acceptable performance in production and protection from operational risks as we enter un-charted waters.

I hope you find this newsletter of interest – it is in all our interests to be effective market practitioners in our respective areas of contribution – from Intel you have our commitment to CAN DO – challenge us on our claims and initiatives.

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Filed under: Issue 1 - Spring 07