Latency and its Importance in Financial Networks

July, 2019 – Latency refers to how long it takes for the results of a command to be displayed on the screen, after it is input in a computer. For the tech savvy, latency is the measured delay in getting a datagram or packet from one hardware location to another. Obviously, the better you want a device or network to perform, the lower the latency should be.

Several factors can lead to delays or high latency. All these factors indicate how well all parts of a network are performing. Just like bottlenecks that cause traffic congestion on highways, computer networks can be held up by bottlenecks like inefficient routing and processing speeds.

The best scenario is a fast, efficient network and extremely low latency.
Need for Speed
Banking and the financial sector can’t allow any delays caused due to high latency.

Financial institutions depend heavily on extremely accurate, up-to-the-second data to remain reliable and profitable. Markets operate and decisions concerning billions of dollars are made every day, based on real-time information. Stock exchanges and global banks require a ‘Zero Latency’ network. In other words, they can’t afford any delays at all.
High latency can have a great adverse effect on stock trading where financial networks are regularly used. The decision to buy or sell stock relies on a fast computer network to access current market information, place an order and have it executed. In the current digital world of high-frequency, algorithmic trading, a delay of even a few microseconds can cost a company, or a person, millions of dollars.
Important for the Future
Old data is useless data. Even the smallest delay, or inaccuracy due to a delay, can cause incorrect decisions or transactions involving large sums of money. It is vital to maintain as low levels of latency as possible since the financial world is demanding ever more reliable, ‘light speed’ networks to base its operations upon.
Sources of Latency in a Financial Communications Network
To reduce latency, it is important to understand the factors that cause latency in fiber optic networks?

• Network Hardware & Transport Delays
The hardware and optical transport gear that is deployed can vary, based on the size and scope of the network. It may be taking time for devices to complete actions, especially any that converting signals from electrical to optical.

• Proximity and Optical Fiber Delays

Apart from the network hardware, the total distance of fiber between two connected points can also cause delays. The shorter the route, the lesser will be the delay.

• Intentionally Added Delays

In some cases, latency may be added at the end of a fiber route to ensure signals arrive at a similar time from a different location.

To find out more, talk to the leading fiber optic cable network installation and network cable restorations experts in New York, ProSplice at 845-235-2115. ProSplice is trusted, capable and experienced in all the critical Fiber Network Environments. ProSplice provides fusion splicing, emergency restoration services, design consulting services and more.