Microseconds matter: Why ultra-low latency networks define success in high-frequency trading

In high-frequency trading, speed isn't just an advantage; it's survival. When algorithms update thousands of orders per second and market opportunities exist for mere microseconds, network latency becomes the ultimate differentiator between profit and loss. 

To put this in perspective, a single eye blink takes about 300 milliseconds, yet fortunes are made and lost in fractions of that time.

To better understand how low-latency connectivity shapes financial markets, we spoke with Sjoerd Rietberg, former co-CEO of Flow Traders and current member of the GNX Advisory Board, who shared his insights into how milliseconds can define trading success.

The economics of speed in trading networks

High-frequency trading firms invest billions in low-latency infrastructure because the math is simple: faster execution means more profitable trades. When price discrepancies between exchanges last only milliseconds, the firm with the fastest low-latency connection captures the opportunity while others watch it disappear.

Consider this scenario: a trading algorithm identifies a pricing inefficiency between the London and Frankfurt exchanges. The window to exploit this opportunity might be 50 milliseconds. If your network latency is 30 milliseconds, you have 20 milliseconds to analyze, decide, and execute. But if your competitor operates on an ultra-low-latency network with 10 milliseconds of delay, they have 40 milliseconds: twice your operational window.

This relentless focus on speed has driven an arms race in trading infrastructure, where firms continuously push the boundaries of network performance to capture every possible edge.

The technical challenge of ultra-low-latency

Achieving ultra-low-latency isn't simply about purchasing faster equipment. It requires a comprehensive understanding of network architecture, physics, and the global connectivity landscape. Every component in the data path matters: the type of fiber, the number of network hops, the processing time at each node, even the physical distance light must travel through the cable.

Traditional enterprise networks rely on standard internet routing, prioritizing reliability and cost over speed. Packets often traverse multiple carriers, take circuitous routes, or queue at congested peering points. For normal business applications, a 50- or even 100-millisecond delay in latency is inconsequential. For high-frequency trading, it's catastrophic.

Geographic arbitrage and global market access

Modern high-frequency trading increasingly operates across global markets, seeking opportunities in the microsecond delays between geographically distributed exchanges. A price movement in Tokyo might predict a corresponding change in London markets, but only firms with ultra-low latency connections to both locations can capitalize on this correlation.

This global scope multiplies complexity. Each international route presents unique challenges: 

• submarine cables add latency,
• regulatory requirements vary by jurisdiction,
• and local carrier quality fluctuates dramatically. 

Understanding these nuances requires deep, localized knowledge that most trading firms struggle to maintain internally.

The challenge extends beyond primary routes. Redundancy is crucial for maintaining uptime, but backup paths must also meet stringent latency requirements. A failover connection that adds even 10 milliseconds of delay might be worse than no connection at all if it causes the firm to consistently lose races for trades.

Latency, however, is only part of the equation. Constantly expanding datasets need to move seamlessly across global sites, feeding algorithms that operate ever closer to the edge. The true competitive advantage lies not only in speed but in precision—delivering the right data, at the right time, to the right place.

Beyond basic connectivity: achieving ultra-low-latency 

Standard business internet connections measure latency in tens or hundreds of milliseconds. Low-latency trading networks operate in single digits. But achieving ultra-low-latency requires more than just fast circuits; it demands strategic routing, optimized infrastructure, and deep expertise in global connectivity markets.

Top trading firms employ multiple strategies to minimize latency. They co-locate servers in the same data centers as exchanges, use microwave and millimeter wave networks for specific routes where they're faster than fiber, and constantly monitor performance metrics to detect degradation before it impacts trading.

The difference between a direct fiber path and one that takes an extra hop through another city can mean losing thousands of trading opportunities — and millions in potential profit — every single day.

Engineering speed through strategic partnerships

Modern trading firms increasingly recognize that building ultra-low-latency infrastructure alone isn't sustainable. The connectivity landscape changes constantly, with new routes, carriers, and technologies emerging regularly. Maintaining a competitive advantage requires continuous optimization and deep market knowledge. Your network partner matters as much as your trading algorithms. 

At GNX, we bring decades of experience navigating global connectivity markets, helping firms identify and deploy optimal low-latency circuits for their specific trading strategies. 

Our platform, GNX+, goes beyond simple procurement. We continuously monitor performance across multiple carriers, identify optimization opportunities, and can rapidly adjust routing to maintain optimal latency. This dynamic management ensures that as market conditions change and new opportunities emerge, your connectivity evolves to match, allowing you to stay ahead in a market where even microseconds define competitiveness.

Additionally, the specialized team at GNX runs monthly scans for optimal routes across the globe, keeping in mind any outages or maintenance performed on cable systems. When planned accordingly, these can be mitigated with the correct (temporary) routes in place. GNX connectivity experts can assist with any bespoke design for your ultra-low-latency network infrastructure.

The future of low-latency trading networks

The pursuit of lower latency continues to drive innovation. Emerging technologies like hollow core fiber, which transmits light through air rather than glass, promise to reduce latency by up to 30%. Quantum networks might eventually enable instantaneous communication. But these advances will only benefit firms with the expertise to implement them effectively.

The race for speed will only intensify. As more firms reach microsecond execution times, the margins for success narrow further. GNX helps firms maintain ultra-low latency connections, letting them focus on what really matters: trading fast and confidently. Microseconds matter — but with the right partner, getting there can be pretty straightforward.

GNX. Straightforward connectivity.