4 ms·

I have a bit of a naive question. If TLS has this much overhead how do HFT and other finance firms secure their connections? I know they use a number of techni

I have a bit of a naive question. If TLS has this much overhead how do HFT and other finance firms secure their connections? I know they use a number of techniques like kernel bypass to get the lowest latency possible, but maybe they have explored some solution to this problem as well.

shiftpgdn 4y ago
Mellanox cards or private links
wyager 4y ago
TLS doesn't really add latency on top of TCP after you make the initial connection - it mostly adds a bit of extra processing overhead for encryption. HFT firms aren't usually encryption-bandwidth-constrained. I'm not actually sure if most exchange FIX connections or whatever actually run over TLS, but that would be reasonable.
drewg123 4y ago
TLS has the highest overhead when you're serving data at rest, like static files that are not already in the CPU cache. For serving dynamic data that is in the CPU cache, TLS offload matters a lot less. Our workload is basically the showcase for TLS offload.
- naikrovek 4y ago
  i love (love) how everyone else who answered this question alongside you made what appears to be a complete stab in the dark guess while only you knew the answer. never be afraid to admit that you don’t know something. guessing wrong is a much worse look than not answering at all.
AtlasBarfed 4y ago
HFT needs to be outlawed. No exchange should allow trades to complete, I would argue in any time less than 15 minutes, and each trade should have a random 1-15 minute delay pad on top of that. The HFT access only serve the larger financial firms, and are used to do frontloading and other basically-illegal tricks. It provides anti-competitive advantage to large firms for markets that are supposed to open access/fair trading. And of course it leads to AI autotrading madness. I get that it keeps a lot of tech people very well compensated, but it is either in the service of unregulated fraud at worst and unfair advantage at best.
- rohith2506 4y ago
  I guess you are completely oblivious to how HFT's work and their actual position in the markets. I am a bit biased considering that I work in the industry but actually working in the industry gave me the inner workings of it and how actually they help to close / tighten the bid - ask spread for various securities. I would highly recommend you to read this book ( https://press.princeton.edu/books/hardcover/9780691211381/trading-at-the-speed-of-light https://press.princeton.edu/books/hardcover/9780691211381/tr... ) or if it's too long form, read this article ( https://www.thediff.co/p/jane-street https://www.thediff.co/p/jane-street ) I am not saying HFT's are in charitable business but they do serve an important role in the financial markets.
- jonahhorowitz 4y ago
  Not really germane to the topic, but a financial transactions tax would effectively kill HFT without the complexity that you're suggesting.
ddmitriev 4y ago
Trading connections that go over private links such as cross-connects between the firm's and the exchange's equipment within a colocation facility are not encrypted.

shiftpgdn 4y ago

Mellanox cards or private links

wyager 4y ago

TLS doesn't really add latency on top of TCP after you make the initial connection - it mostly adds a bit of extra processing overhead for encryption. HFT firms aren't usually encryption-bandwidth-constrained. I'm not actually sure if most exchange FIX connections or whatever actually run over TLS, but that would be reasonable.

drewg123 4y ago

TLS has the highest overhead when you're serving data at rest, like static files that are not already in the CPU cache. For serving dynamic data that is in the CPU cache, TLS offload matters a lot less. Our workload is basically the showcase for TLS offload.

naikrovek 4y ago
i love (love) how everyone else who answered this question alongside you made what appears to be a complete stab in the dark guess while only you knew the answer. never be afraid to admit that you don’t know something. guessing wrong is a much worse look than not answering at all.

AtlasBarfed 4y ago

HFT needs to be outlawed. No exchange should allow trades to complete, I would argue in any time less than 15 minutes, and each trade should have a random 1-15 minute delay pad on top of that. The HFT access only serve the larger financial firms, and are used to do frontloading and other basically-illegal tricks. It provides anti-competitive advantage to large firms for markets that are supposed to open access/fair trading. And of course it leads to AI autotrading madness. I get that it keeps a lot of tech people very well compensated, but it is either in the service of unregulated fraud at worst and unfair advantage at best.

rohith2506 4y ago
I guess you are completely oblivious to how HFT's work and their actual position in the markets. I am a bit biased considering that I work in the industry but actually working in the industry gave me the inner workings of it and how actually they help to close / tighten the bid - ask spread for various securities. I would highly recommend you to read this book ( https://press.princeton.edu/books/hardcover/9780691211381/trading-at-the-speed-of-light https://press.princeton.edu/books/hardcover/9780691211381/tr... ) or if it's too long form, read this article ( https://www.thediff.co/p/jane-street https://www.thediff.co/p/jane-street ) I am not saying HFT's are in charitable business but they do serve an important role in the financial markets.
jonahhorowitz 4y ago
Not really germane to the topic, but a financial transactions tax would effectively kill HFT without the complexity that you're suggesting.

ddmitriev 4y ago

Trading connections that go over private links such as cross-connects between the firm's and the exchange's equipment within a colocation facility are not encrypted.