Confinity Solutions: Win Trades with High Speed and Low Latency Communication

Timing is the key to success in the stock market. The faster an order reaches the exchange, the higher the chances of winning the trade. As a result, high speed and low latency communication is indispensable in the financial trading market. To address this market need, in 2008, IBM tasked one of its IBM research laboratories to develop a new highly reliable, ultra-fast messaging system utilising Ethernet’s multicast (UDP) standard. The so called ‘Low Latency Messaging’ (LLM) middleware solution was further complemented through the acquisition of InfoDyne Corporation, a privately held U.S. software firm specializing in high speed market data processing and delivery. Soon, the acquired firm’s market data system and LLM became part of IBM’s WebSphere product line. The software giant then hired Stefan Ott, an expert in the financial market with an experience of over a decade in managing worldwide sales and business development of the new WebSphere Front Office and WebSphereMQ LLM products, and financial markets framework offerings. Ott points out that customers were using these products for high volume data exchange in the financial market, and there was an increasing demand to continually maintain, update, and upgrade the product. Since IBM offered over 4000 software solutions, it did not have much time/interest to dedicate resources and invest money to keep MQ LLM at the leading edge of technology. As a result, customers were concerned if the WebSphere Front Office and WebSphere MQ LLM product lines would be discontinued as it only catered to a small market.

Looking at the scenario, Ott saw an opportunity to give these products a new future and founded Confinity Solutions in 2016 to acquire the source code of IBM WebSphere MQ LLM and Front Office and then take them to the next level. The company focused on reviving the products to respond to customer enhancement requests as well as market trends. The company’s Confinity Low Latency Messaging (CLLM) software is the successor to the IBM’s WebSphere MQ LLM offering whereas Confinity Market Data System (CMDS) is that to IBM WebSphere Front Office. Today, CLLM has wide application in financial markets trading ideal for this new world of exchanges which are multi-asset, multi-model, all dependent on flexible, robust technology. Ott still holds a strong partnership with IBM and works with them to resell CLLM software. The company is handling support for IBM customers as well as its direct customer base. “While IBM is a ‘tanker,’ Confinity Solutions is a ‘speedboat’. It takes hours for a tanker to change course and reach a new destination, but it is fast and easy for a speedboat; that is what we are doing with CLLM,” mentions Ott, founder and CEO of Confinity Solutions.

Instantaneous Delivery of High-Volume Data

CLLM plays to its strengths in financial trading environments requiring extreme low-latency, high message volumes and quality of service. It offers flexible message delivery options, high system availability, quick message filtering, system monitoring, and congestion control.

The solution’s flexible message delivery streamlines high volume data transport while the high performance and availability help maintain high-quality service levels and protect the integrity of the data stream. Clients in the financial trading market can also make efficient use of system resources using message control and filtering as well as send messages with improved speed and reliability. Besides, CLLM’s standards-based integration tools extend the use of WebSphere MQ Low Latency Messaging. Ott highlights the fact that the collision of data packets on network or network congestion is a common scenario leading to an increase in latency. Confinity's solution, on the other hand, is well equipped in detecting collisions on the network and controlling the congestion to bring the outliers close to the average latency. For example, if the network is free from congestion, the latency is two microseconds, which gets extended in case of an outlier or congestion. The CLLM solution can ensure that the average latency of two microseconds is not disturbed even in the presence of an outlier. In a nutshell, CLLM is designed for financial institutions and other organisations that require near-instantaneous and reliable delivery of huge volumes of data. The company has set high benchmarks by distributing 98 million messages per second on native InfiniBand and shared memory as well as 75 million messages on 10 Gigabit Ethernet, which is second to none in the industry.

Ott explains a typical scenario at an exchange that begins when a broker wants to enter a new trade, he sends a market order to the exchange gateway, which is a server that takes in all the orders from the market participants. The exchange gateway then delivers the order to the core of the trading system, the matching engine, where all the buy and sell orders are matched for the trade to actually take place. “Here, the stock exchange has to ensure that the order received at the gateway is forwarded to the matching engine in the fastest time possible meaning the first order sent in should also be the first order reaching the matching engine. And this is exactly what we provide,” says Ott. In fact, numerous clients have quoted Confinity’s solution to be a 'fair messaging system' (which allows to build fair trading systems). “Many exchanges across the globe like the Bombay Stock Exchange vouches for being the fastest in doing business with their customers, thanks to our CLLM software,” says Ott. What is more, Confinity Solutions relentlessly works toward serving its clients even during the current COVID-19 crisis, where exchanges cannot afford to shut their business.

The company has assisted several clients, including the Moscow Stock Exchange in operating 24/7 with minimal staff to avoid a significant impact on their business.

Financial market customers approach Confinity Solutions for massive implementation projects while building a new trading system infrastructure. The company begins with a proof of concept and then moves ahead with sending in its experts to train developers from the exchanges on specific aspects. Once done, Confinity provides 24/7 support services. Clients typically use CLLM to build their trading applications, whereby CLLM delivers a set of APIs with high flexibility and configurability.

Customers can use CLLM for shared memory app2app communication today and switch to reliable multicast messaging via Ethernet UDP tomorrow without the need to change their applications.

In fact, Confinity is all set to launch the new version of its solution, CLLM 4.0 featuring hardware-accelerated low latency messaging. Earlier, the CLLM software ran on existing OS and CPU, which were being used by other processes and tasks that take away significant processing power from the CPU. Resultantly, CLLM also gets delayed. The company's new hardware accelerators can directly fit into the client's FPGA chip on the Ethernet network card, reducing the load on the CPUs. The revised CLLM software is now part of the network and does not need the CPU and the power of the computer anymore as it is now running on its own chip. The software will be even faster than before with improved performance and reduced latency, thus increasing the throughput. "CLLM 4.0 will make reliable low latency multicast messaging even more predictable, deterministic and platform agnostic,” says Ott. With the new launch, the company anticipates growth in not only the financial markets space but also new markets with similar requirements of an ultra-fast and reliable multicast messaging system such as automotives or telecommunications.

A case in point is that of Deutsche Börse, one of the leading market place organisers for the trading of shares and other securities. The client wanted a new standardised global technology infrastructure supporting future operations of its trading systems. Confinity Solutions helped them build a new architecture for different markets and financial instruments using its CLLM software for high-speed transport. As a result, Deutsche Börse offered high efficiency, speed, throughput for its trading systems across all asset classes with optimum support for expansion while processing over one million quotes per second.

“CLLM 4.0 will make reliable low latency multicast messaging even more predictable, deterministic and platform agnostic”

Built as an add-on for the CLLM solution is CMDS, which is a vendor-neutral market data distribution system with high reliability and flexible integration capabilities. CMDS enables organisations to collect financial market data from stock exchanges and other data vendors, aggregate and then redistribute it to their customers. "We aim to use CMDS as basis for cloud-based market data utilities to offer market data as a service and to replace proprietary market data middleware in financial institutions," says Ott. The platform is built to be system agnostic and can accept data from any provider.

Setting New Benchmarks

The company's international reach is due to its team that is working from around the world, including India, Germany, and China. "We can communicate with many of our customers in their local language as we have native Spanish speaker from Venezuela, native Hindi from India, native Chinese from China," says Ott.

Confinity Solutions continuously listens to its customers, who are mostly market leaders in their industry (tier 1 exchanges) with state-of-the-art technologies. It is a member of the STAC research consortium, which is focused on technology trends and benchmarks in the financial industry. The company will launch its upcoming CLLM 4.0 at the next STAC global event in October 2020. Confinity Solutions will continue paving the way for new solutions for the financial market.