Co-location of servers with matching engines is not where it’s at, said consultant Carl Carrie, former head globally of algorithmic products and high frequency market making at JPMorgan.
“The most engineering ingenuity,” he said, “is being embedded in silicon.”
And that silicon is not general purpose processors, used for basic office tasks. Rather, they are field-programmable gate arrays, used widely in the video game industry to process rapidly changing graphics, action, sound – and player instructions.
That means, for instance, that in high-frequency trading, which now accounts for an estimated two-thirds of all equities trading in the United States, the main maker of microprocessors, has left the FPGA race to Nvidia, the dominant producer of graphics processors for video gamers, said Carrie.