“Low latency” is one of the most over-used phrases in financial technology, and one of the least understood. For a firm running automated strategies, latency is not a marketing adjective - it is the time, measured in microseconds, between a market event and the moment its order reaches the matching engine. When many participants are reacting to the same signal, the fastest to arrive wins. That is why so much money and engineering goes into shaving the number down.
Where the microseconds go
Latency accumulates at every step of the path: the length of fibre a signal travels, the number of devices it passes through, the quality of the cable systems, and the distance between your servers and the exchange. Most of these are decided long before a single order is sent - they are decided by how the network is built.
KVH’s approach is to attack each source in turn. We use as few media converters and network devices as possible, so there are fewer hops. We select the lowest-latency cable systems and optimise the fibre backhauls. And we place our points of presence as close to the exchange matching engine as we can. The detail behind this is on our page About KVH’s Network.
Proximity is the biggest lever
Of all the variables, physical distance is the one you cannot argue with: light in fibre travels about 200 kilometres per millisecond, and there is no optimising your way around the speed of light. That is why proximity hosting and exchange colocation matter so much - putting your infrastructure metres, not kilometres, from the venue removes latency that no amount of clever routing can recover.
From microseconds to advantage
None of this is latency for its own sake. The point is business advantage: better fills, tighter spreads, more reliable strategy performance and the confidence to connect to new venues quickly. That is the thinking behind KVH’s Capital Markets Solutions - an integrated platform of network, data center and proximity services built for the particular demands of Asian trading. If you are evaluating connectivity for a trading strategy, start with the network, because that is where most of your latency is decided.