Latency, Liquidity, and Precision: The Real Value of Speed

When we refer to “speed” in the context of institutional trading, it isn't just about shaving milliseconds off execution — it's about enabling clients to act decisively, capture opportunity and manage risk effectively. With speed playing a more critical role than ever, it is essential to understand its true meaning, and how latency, liquidity and precision interact in today’s markets.

Latency vs Execution: Why the Distinction Matters

Speed refers to the efficiency and responsiveness of executing trades with the aim of maximising profits. However, it is important to distinguish between two key components of this:

• Execution speed: This refers to the time taken to fill a trade from the moment it is placed. Reducing this time decreases the risk of adverse price movement by allowing less time for market shifts and increasing the likelihood of more favourable fills.
• Latency: This refers to the delay in receiving market data or transmitting orders. Lower latency allows high-frequency trade activity, rapid order placement, and access to market prices before they adjust – a particularly crucial factor when dealing with increased volatility.

Execution speed and latency can be affected multiple factors, including the quality and responsiveness of the price engine, server locations and their proximity to major liquidity hubs and the efficiency and optimisation of order routing and infrastructure.

From an external perspective, high-impact macroeconomic data releases or geopolitical events can rapidly affect pricing. In these conditions, high-speed execution can ensure that clients secure the price before it moves, avoid partial fills and maintain control over slippage.

Speed as a Risk Management Tool

High-frequency trading strategies rely on ultra-fast technology to execute a large number of trades within a very short timeframe, in which speed is essential to capture the small price differences. Minimizing latency is especially important in HFT as it is essential in maximising trade speed and, therefore, profitability.

Algorithmic trading strategies are also heavily reliant on speed as their effectiveness is dependent on executing faster than the market can react, by identifying and capitalising on fleeting market opportunities. These strategies aim to reduce the need for timely decision making and human errors, resulting in faster execution and an increased competitive advantage.

Partnering with an experienced, and efficient liquidity provider is essential to safeguarding speed-sensitive strategies.

How We Deliver Low-Latency Execution

At iSAM Securities¹, we utilise advanced trading infrastructure to minimise latency and deliver consistent execution regardless of market conditions. Leveraging advanced quantitative methodologies, our approach ensures competitive and reliable pricing tailored to a wide range of trading strategies. Our market leading execution with an average time to fill of less than 10 milliseconds ensures minimal slippage and low rejection rates.

From a risk management perspective, our real-time risk analytics dashboard, iSAM Securities RADAR, provides the tools required to make informed decisions and manage risk across trades, including a dedicated “aftermath” feature to assess the effects of latency on trade profitability.

Staying Ahead

Ultimately, speed underpins every stage of the trade lifecycle from improving execution quality, to supporting trading strategies, to mitigating risk. Searching for the right, or fastest, liquidity partner can be difficult. At iSAM Securities, we combine low-latency infrastructure with deep, multi-asset liquidity and real-time analytics to empower institutional clients to trade confidently, no matter the market conditions. With the recent increases in volatility, learn more about how our solutions could support your trading strategy - iSAM Securities Liquidity

¹iSAM Securities (UK) Limited, iSAM Securities (HK) Limited and iSAM Securities (Global) Limited, iSAM Securities Limited and iSAM Securities (USA) Inc. are together “iSAM Securities”.