Advanced Computing in the Age of AI | Thursday, March 28, 2024

SDN Scheme Aims to Cut Capital Markets Client Provisioning Delays 

With the expansion of their global software-defined network (SDN) dedicated to the capital markets industry, Lucera Financial Infrastructures and fiber optics vendor Perseus assert they have cracked one of the most vexing problems faced by traders: shortening the process of onboarding new clients from weeks to one or two days.

Delays in provisioning clients can cost traders $1,000 a day. “This lost revenue can mount up substantially, before accounting for the negative impact to clients’ revenues and damage to the relationship,” said Lucera CEO Jacob Loveless.

Speeding go-to-market capabilities is enabled by Lucera Connect, combining SDN technology developed by Lucera with Perseus’s LiquidPath fiber optic network, which provides data to financial markets for buy- and sell-side and service vendors. LiquidPath was recently expanded into Asia/Pacific with the addition of 120,000 km of subsea cable. From an initial roll-out covering London-New York-Chicago in 2013, Lucera Connect now encompasses financial centers worldwide via 53 colocation centers in 15 countries on six continents.

Lucera Connect complements Lucera Compute, a cloud-based system dedicated to high frequency trading, liquidity matching, and foreign exchange.

Loveless told EnterpriseTech that Lucera Connect is founded on his experience as head of high frequency trading for Cantor Fitzgerald, the New York trading and investment banking services company where he ran several trading desks. While at Cantor, Loveless saw the need for a faster way to connect traders and new customers, one that broke out of the weeks-long, hardware-laden provisioning model involved in hooking together switches, routers and extranet providers.

Starting in 2006, he and colleagues began to develop connectivity utilizing SDN, which takes the capabilities typically handled in hardware and implements them in software, for greater networking efficiencies and administrative flexibility. By 2013, Loveless wanted to move his focus to enabling trading, and with the blessings of Cantor’s financial backing he formed Lucera, which commercialized the SDN network he had been developing for the previous seven years. Loveless reports that along with Cantor, hundreds of trading companies in New York and London use Lucera Connect to provision clients.

The Lucera Connect SDN is powered by a customized version of SmartOS/IllumOS, modern derivatives of the OpenSolaris code base. Loveless said Lucera programmers do OS-level work and kernel engineering and work with vendors such as Intel and network interface vendor SolarFlare to implement custom drivers and configurations on thin X86-based boxes to achieve "telecom-grade reliability and Wall Street-level performance.” Lucera Connect is a proprietary SDN stack that sits atop the company’s base orchestration and OS levels. “We’ve taken our SDN technology and built a global network entirely managed by software,” Loveless said.

Chips used in the SDN nodes are refreshed every 18 to 24 months, with the current generation using Intel Haswell E5-2690v3. “Packet processing is embarrassingly parallel, the more cores we have lowers the unit cost of servicing the packet,” he said. “That’s a fundamental difference for us utilizing SDN technology – our unit economics decrease every year. People don’t tend to upgrade their routers every year, it’s not economically feasible, whereas we swap out chips and then service 20 million packets per second per interface.”

He said the two Lucera platforms – Connect and Compute – have been designed to be something like the “internet for finance.” “When you go to sign up for Facebook, you don’t buy a private line and a router that takes you to Facebook. That makes no sense. We’re doing the same thing for finance. You run one connection to Lucera Connect and any of the 53 colocation datacenters [where trading companies rent servers and other computing hardware] around the world, and you can get to any other financial institution with the click of a button.”

Lucera Connect is a web-based portal designed for marketplaces where provides and clients enter and exit frequently, a “just-in-time delivery model,” Loveless said, that lets traders quickly spin up and tear down connectivity with clients based on fluctuating client activity.

“You don’t have to think about where they are,” Loveless said, “it’s all point and click from a web site. The person who runs the business and pays the bills is provisioning the clients.”

Pricing for Lucera Connect is “globally flat,” the same rate regardless of whether the connections are between New York, London, São Paulo or Tokyo. Contracts are month-to-month based on “logical flows,” which are connected applications between trader and client. By contrast, according to Loveless, the legacy model involves client contracts that last 12 to 36 months, which can leave traders paying for connectivity to inactive clients no longer generating revenue.

 

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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