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Joanna Fields
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Navigating Cybersecurity on a Stretch of "Regulatory Rapids"

In this shared commentary, Aplomb Strategies writes that when considering a firm’s governance structure, a holistic approach makes the most sense.

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May 1, 2012

JPMorgan Offers Own Speedy Risk Checks

By John D'Antona Jr.

JPMorgan has announced a low-latency risk check system for speed sensitive traders. The firm previously used outside vendors for the task.

The system is software and hardware based A trader can select either the software or the hardware solution, depending on his needs. The slower software portion offers a one-way trip to the exchanges in about 50 microseconds. The faster hardware solution, which utilizes field programmable gate array semi-conductor chip technology, delivers a one-way speed of less than 10 microseconds, according to Neal Goldstein, a managing director who is head of global connectivity.

"Users can choose between the hardware or software solution, depending on their latency needs," Goldstein said.

The system is designed to support compliance with the SEC's market access rule 15c3-5. The rule requires that all orders go through risk checks before being executed. The faster the checks, the faster an order can be filled.

Prior to these products, JPMorgan offered clients risk check software via external vendors Gateway Solutions, FTEN and FlexTrade. For those not as latency sensitive, JP Morgan will route orders through its FIX platform and order management system.

The hardware solution is the most expensive followed by the software offering.

Clients started using the firm's software solution in November of last year, while the hardware-based offering was released to users in February.

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