In financial markets, speed is everything. The difference between milliseconds and microseconds can define success in this highly competitive trading landscape. Low-latency trading engines ensure that trades are executed quickly enough to capitalise on fleeting opportunities.
While the performance spectrum for latency ranges from seconds to nanoseconds, Chronicle Software has been operating in the single-digit microsecond domain for years, offering tools that help trading firms maximise their potential through fast Java and multi-language solutions and user-friendly APIs.
In this blog, we’ll explore the complexities of building low-latency trading systems and highlight how Chronicle’s tools and methodologies can address common challenges.
Challenges in Low-Latency Trading
When it comes to low-latency trading, development teams must address several critical challenges to ensure reliable performance.
Threading and Core Utilisation
Inefficient thread management can introduce significant delays, especially during context switching — when the operating system moves threads between CPU cores. This can cause unpredictable latency spikes, also known as “system jitter.” Interrupts, CPU power management and other system-level factors further exacerbate jitter.
With Chronicle Tune, our system tuning software, these issues can be mitigated, allowing users to fine-tune performance and reduce jitter across their infrastructure. Chronicle Tune optimises system configurations in hours, maximising performance while also reducing data centre power consumption — enhancing your green credentials.
Serialisation and Deserialisation
Handling vast amounts of real-time market data is essential, but the process of serialisation — converting data into a format that can be stored or transmitted — can be a bottleneck. Similarly, deserialisation impacts performance when data needs to be reconstructed in real-time for trading decisions.
Message Passing and Data Persistence
Ensuring fast, reliable message delivery between trading components while processing large volumes of data is a constant challenge. Trading systems must strike a balance between performance and persistence, especially with the need to comply with regulations that require accurate record-keeping.
Addressing Low-Latency Trading Pain Points
Chronicle Software provides solutions specifically designed to tackle these challenges, ensuring consistent performance at microsecond-level latencies.
Thread Affinity and Event Loop Optimisation
One of the key tools Chronicle offers is Thread Affinity, which binds threads to specific CPU cores. This reduces micro-jitter and improves overall performance consistency. Thread Affinity is particularly effective on Linux and allows developers to ensure that key trading operations remain isolated from other system tasks.
By isolating CPUs using techniques such as modifying kernel parameters (e.g., isolcpus), the system can dedicate specific resources for trading applications and minimise manual intervention.
Additionally, Chronicle Tune can further optimise box performance for low latency by configuring multiple facets of your system. Instead of spending months tweaking system settings, you can achieve superior performance within hours, enabling your team to focus on trading rather than system administration.
Efficient Message Passing
Trading systems must communicate across components quickly and reliably, and to achieve this, we’ve developed Chronicle Queue. This is not just another queue implementation; it’s a broker-less, low-latency messaging framework designed to provide stable performance in high-throughput, memory-intensive applications. By using off-heap storage and a myriad of low-latency techniques refined over years of research and development, Chronicle Queue avoids the frequent garbage collection pauses typical in Java applications, ensuring microsecond-level latencies for both in-memory and persisted messages.
Chronicle Queue allows messages to be appended to the end of the queue and read using a tailer, supporting random-access seek. This means that as data of any type enters the system, it can be reliably processed and passed between components in real-time, with messages persisted in memory-mapped files. This design enables the queue to handle millions of messages per second while maintaining total ordering of events, critical for trading systems where consistency and speed are paramount.
For distributed systems, Chronicle Queue’s Enterprise Edition supports replication, ensuring messages can be passed between Java virtual machines (JVMs) on different machines. This makes it an ideal choice for global trading platforms where latency and reliability are key factors. Beyond Java, Chronicle Queue also supports C++, Rust and Python, making it ideal for global trading platforms where multi-language integration is a requirement.
Minimising Garbage Collection
Garbage collection is a common source of latency spikes in Java applications, particularly in high-performance environments like trading systems. Chronicle Queue mitigates this issue by using off-heap storage, efficient resource management, memory mapping and other low latency techniques – all of which minimise the need for frequent garbage collection. As a result, trading systems can process large volumes of data without the interruptions that garbage collection typically introduces.
Performance Tuning for High-Throughput Trading
Chronicle’s expertise extends beyond the software layer. Our solutions are tuned for optimal performance at both the operating system and application levels, providing organisations with comprehensive low-latency trading engines that can handle billions of events on a single server. Chronicle Queue makes full use of the available hardware, leveraging disk storage for large data sets while keeping on-heap memory usage minimal. This ensures that even as the system scales, performance remains stable and predictable.
For developers looking to further optimise performance, Chronicle’s software include features and dedicated tools for tasks like archiving (offered in the Enterprise Edition) and advanced replication capabilities, allowing for seamless data handling across distributed systems with minimal latency.
Real-World Example: A High-Performance Trading Engine in Action
Let’s walk through a typical trading process that leverages Chronicle’s solutions:
- Accepting Market Data: Real-time market data streams into the trading system. With Chronicle Queue managing message passing, data is appended and persisted in memory-mapped files, ensuring uninterrupted processing. Chronicle-Wire, our low latency serialisation library, efficiently converts bytes on the market data stream to Java objects with minimal overhead.
- Making Trading Decisions: The system processes incoming data using trading algorithms, quickly accessing and utilising it in real-time for decision-making.
- Chronicle Queue for Communication: Once a decision is made, Chronicle Queue facilitates efficient communication between components, ensuring latencies remain in the single digit microsecond range in local environments.
- Keeping Latency Stable: Critical trading processes are locked to specific CPU cores using Chronicle’s Java Thread Affinity tool, reducing jitter and ensuring predictable execution.
Chronicle’s holistic approach to optimising threading, message passing and latency management ensures that trading firms can scale their operations without compromising performance.
Bringing It All Together with Chronicle Services
Building low latency trading engines is a complex endeavour, but Chronicle makes it easier.
With a full suite of tools optimised for low-latency Java applications and highly tuned multilanguage APIs Chronicle enables developers to create high-performance trading systems quickly and efficiently. Chronicle Services fast-tracks your low-latency implementation, allowing you to focus on delivering business value right away instead of spending years developing in-house frameworks.
Beyond threading, message passing and latency minimisation, our solutions encompass advanced capabilities for data replication and cloud communication, ensuring a comprehensive approach to low-latency trading.
Ready to explore how Chronicle Services can transform your trading systems? Contact us today to learn more about our full suite of tools and how we can help you build the low-latency systems that give you an edge in the financial markets.
