AI-Driven, Hardware-Accelerated, Ultra-Low-Latency Trading System
- John Lockwood
- Oct 11
- 3 min read
Supermicro and Algo-Logic Deliver Ultra-Low Latency execution of sophisticated trading strategies of Futures and Options. The system leverages an AI cluster, an analytics server with precise timestamping, and hardware-accelerated trade execution
Background
Global commodity markets influence the prices of energy, crops, exchange rates, interest rates, and precious metals. The Chicago Mercantile Exchange (CME) is the largest platform for trading these commodities. Companies involved in these markets must constantly monitor multiple factors to determine the best prices for futures and options contracts.
Over the past 106 years, the time required to execute a trade has significantly decreased. Originally, human traders in a pit used open outcry to match orders. In the 1980s, trading shifted to electronic platforms with the rise of desktop computers. Starting in the 2000s, High-Frequency Trading (HFT) emerged, using the fastest CPUs in colocation to execute trades, reducing trade times from several seconds to less than a microsecond.
Latency Drives Profit
Figure 1 shows the advantage of trade execution with Algo-Logic Gateware over traditional trading software implementations. Traditional software trading systems are not deterministic and exhibit a long latency tail, introducing delays of many tens of microseconds for trade execution. Even with kernel bypass software, the latency of a trade is typically several microseconds.
In contrast, FPGA trading systems offer the lowest latency, measured in just a fraction of a single microsecond — almost an order of magnitude less than even the kernel bypass. With FPGA implementations, deterministic performance enhances the trading system experience by providing low T2T latency with no tail. This incredibly fast trade execution gives trading firms a competitive edge.
Figure 2 shows that Algo-Logic has developed a trading system that utilizes an FPGA accelerator with Gateware to provide ultra-low latency trade execution. Trading firms use the Algo-Logic solution to execute their trades quickly and deterministically. Algo-Logic’s T2T system enables the implementation of trade strategies in hardware through its Software Development Kit (ALSDK) interface. This C++ library can be called from host software on a CPU core or via RESTful interfaces. ALSDK provides application programming interfaces (APIs) for pre-loading triggers and monitoring the T2T system.
AI-driven Hardware-Accelerated Trading System
In the past, trade strategies were painstakingly developed by quantitative analysts (quants) using cumbersome software tools. They back-tested trade strategies using historical market data by running scripts and software tools. Today, AI clusters with GPUs utilize modern analytical tools to process large volumes of market data, identifying potentially profitable trade strategies.
One key aspect of the Algo-Logic and Supermicro complete solution is continuously comparing the actual financial performance of the system to the market’s expected performance derived from the predictive model. Although back-testing an AI-generated strategy can predict potential financial gains (alpha), real profits are only realized when live trades are executed in the market. An analytics server enables the ongoing refinement of a strategy as trades are executed in real-time. Through this process, firms can create new trading strategies, run back-testing scenarios, and verify potential enhancements in financial performance. With Supermicro and Algo-Logic, firms have the ability to update trading strategies throughout the day, rather than only on a daily or weekly basis.
The key to the success of any trading strategy is the ability to act on market data events (triggers) by sending orders to the exchange with Ultra-Low Latency. The Algo-Logic Tick-to-Trade system, with deep sub-microsecond latency, provides the
speed advantage needed for small firms to compete effectively with top HFT firms. Algo-Logic supports multiple advanced triggers, enabling trading firms to implement increasingly complex strategies while maintaining very low Tick-to-Trade latencies.
Conclusion
By combining Algo-Logic’s Ultra Low Latency trading logic with Supermicro’s market-leading server technology, high-performance, pre-configured trading systems can be rapidly deployed. Trading firms can leverage AI to develop trading strategies that ultimately run in logic. This innovative system not only delivers Ultra-Low Latency Tick-to-Trade capabilities but also leverages AI capabilities to develop, back-test, and continuously refine trading strategies.