Corvil's Byrne Discusses Latency, High-Frequency Trading and Co-location
Traders Magazine Online News, August 12, 2009
Donal Byrne is chief executive of Corvil, a vendor specializing in latency management and monitoring technology. With more than 20 years of experience in computer systems, networking and telecommunications, he joined Corvil in 2000 as non-executive chairman and became chief executive in 2002.
Donal Byrne, Corvil
Prior to Corvil, Byrne was a founding management team member of FirstMark Communications, an alternate broadband service provider in Europe, and served as senior vice president and chief marketing officer. From 1993 to 1999, he worked in Silicon Valley at firms that specialize in Internet switching and routing products. His early work focused on high-speed optical transmission and telecommunications systems.
In this interview with Traders Magazine Senior Writer James Ramage, Byrne talks about high-frequency trading--as well as the quality of liquidity it brings to the marketplace--co-location, the predictability and visibility in latency management and unequal latencies at market venues.
Traders Magazine: What do you make of the boom in high-frequency trading?
Donal Byrne: It does seem to have a new lease on life in the last couple of weeks. I'm not quite sure what's going on. But it's been all over the place.
TM: By some estimates, high-frequency trading represents upward of 70 percent of total equities volume. Does that sound right to you?
Byrne: Yes. I think that's very credible. Certainly, on any given day and probably on average, orders relating to automated/high-frequency/arbitrage--it's all getting pooled together--probably constitutes at least 70 percent of the order flow in this space.
TM: What do you make of this? Is this good for the markets?
Byrne: I think time will tell. That's what people are trying to figure out. Certainly, it's good for some set of folks who are successfully implementing high-frequency trading strategies. So, someone is getting some good out of it.
I think the way you have to look at this is that the trading industry and the trading environment have always leveraged technology. And technology has always been a differentiator in the world of trading, even with the first introduction of basic computers to do better front-office executions or better back-office clearing. People have always leveraged out technology. And people who have done that successfully have tended to gain market share and tended to increase profits and tended to grow their business. I don't think we should be looking at high-frequency trading as something that is very different, or Machiavellian, or maybe hard to understand, where people suspect there is an ulterior motive at play here.
TM: Many people seem to be doing that, of late.
Byrne: I think, as a technologist, you look at it and say that: OK, people are leveraging fast computers and fast algorithms and observations to improve their trading strategies, and technology is playing a huge role in that. And there are numerous other examples within other industries where these types of technologies have been introduced and have created changes in the marketplace.
