A matching engine so fast it required new measurement technology to verify its speed is being launched by ALGO Technologies, the new company headed by Hirander Misra, who previously tore up European exchange orthodoxies as a founder and COO of Chi-X Europe.

The new trading system - named ALGO M2 - has an external round-trip latency of just 16 microseconds measured from customers sending orders and receiving an acknowledgement or trades. That compares with the current leading European platform latencies of approximately 400 microseconds, while legacy system latencies at some exchanges are substantially higher. ALGO M2 can therefore process 15-30 trades in the time it takes for the price to move once on other platforms:

Trading System/ Venue              Average Round-Trip Latency (milliseconds)
ALGO M2                                  0.016
NASDAQ OMX INET                     0.250
Bats Europe                              0.270
Chi-X Europe                            0.400
NYSE ARCA                               0.900
LSE Tradelect                           <2.000
TSE Arrowhead      &nbs                   5.000

Source: ALGO M2 (CorvilNet latency measurement based on sending over 300,000 messages per second across multiple stocks and client connections. As a comparative example, the whole market in Europe across all exchanges/ MTFs is approximately only 75,000 messages per second.); Exchanges/ MTFs: Exchange web sites and press releases. Please note: One microsecond is one millionth of a second. One millisecond is one thousandth of a second. ALGO M2's round trip times are therefore 16 millionths of a second.

ALGO M2 is distinguished from other systems by a number of specific features designed for contemporary markets. Legacy systems pre-date today's automated trading practices from an era when most orders were entered manually and have been adapted for them, not always satisfactorily. ALGO M2 perforrmance, reliability and scalability were designed in from the start, leading to an internal latency to process an order at 500 nanoseconds creating the mathematical capacity to process two million messages per second on a single matching engine. This is ground breaking and for a distributed software application, numbers that seemed impossible to achieve until now. Some exchange systems in the quest for latency reduction have in recent times become unstable when pressed to their limits in terms of messaging rates as they are not designed for this sort of trading.

The ALGO Technologies matching engine is so fast the company had to develop new latency measurement resources to quantify it. Using a process known as Field Programmable Gateway Array Hardware acceleration it first established the values before performing independent verification and benchmarking using CorvilNet, a leading and respected independent latency management system.

ALGO M2 will be made available under license to exchanges, MTFs, brokers/dealers and internalisers from 24th May with the launch of ALGO Technologies' global exchange services business.

Hirander Misra, co-founder and CEO of ALGO Technologies which developed ALGO M2, said "Many legacy exchange systems are up to 20 years old while most of the current fastest trading engines date back from design principles introduced by ECNs in the US well over 10 years ago. This is no longer about slicing performance. We've taken a fundamentally new approach to matching engine construction and built a new trading system from first principles to put an end to the latency debate. Users of matching technology have previously been offered legacy technology at premium rates for far too long. ALGO M2 is also easily extendable beyond equities and ETFs into other asset classes; it's near light speed and throughput being very conducive to options trading, for example."

Donal Byrne, CEO of Corvil, commented," CorvilNet is unique in its ability to monitor latency with microsecond precision for electronic trading and market data applications and infrastructure. We are pleased that CorvilNet was used by ALGO M2 to measure trading system latency at this unprecedented low level."

Alexei Lebedev, co-founder of ALGO Technologies and Chief Architect of ALGO M2, added "ALGO M2 offers unrivalled performance, reliability and scalability, with the added advantage of being ready now with all the major functionality that you would expect. ALGO Technologies will also provide ALGO M2 with full open access to the code across all components deployed unlike the majority of current trading platform providers. This will ensure that users can avoid expensive software support contracts and have the option to handle their own platform maintenance and development through initial training and ongoing support as required."