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Why FPGAs?

Quant Finance requires quick transactions that must occur in milliseconds (even nanoseconds). Being a millisecond slower than their competitor can lead to a loss of a lot of money. This is where FPGAs come into play within the quantitative finance world. Financial companies are looking for the best FPGA technology to compete. Why specifically FPGAs? FPGAs are known for their high-speed transactions and parallel processing. This is essential for high-frequency trading (trading large volumes of shares that are bought and sold automatically in high speeds).

Efficiency/HFT

Quantitative finance requires the ability to process lots of data and execute trades based on mathematical models. This must be done in than microseconds. Other systems cannot meet the latency requirements of high-frequency trading like an FPGA can. FPGAs offer a solution by allowing trading algorithms to be executed directly on the hardware, which reduces the time taken to process trades.

Market Data Processing

One of the primary uses of FPGAs in quantitative finance is the processing of market data. FPGAs can filter, normalize, and analyze incoming data from exchanges in real-time, allowing traders to react to market changes instantaneously. This capability is crucial for strategies that rely on arbitrage opportunities, which may disappear in milliseconds.

Order Execution

Once a trading opportunity is identified, executing the order with minimal delay is critical. FPGAs can be programmed to automatically execute trades based on certain criteria, bypassing the need for the order to be sent back to a central server for processing. This direct market access reduces latency and ensures that trades are executed at the most opportune moments.

Risk Management

In addition to executing trades, FPGAs play a crucial role in risk management. Quantitative trading strategies often involve leveraging complex models to calculate the risk associated with trades or portfolios. FPGAs can rapidly perform these calculations in real-time, enabling traders to adjust their strategies based on current market conditions and risk exposure.

Customization and Flexibility

One of the key advantages of FPGAs is their can be customized through programming. This allows them to be customized for specific trading algorithms or strategies. image