Cisco Nexus Ultra-low Latency Solutions Accelerate High Frequency Trading 1 Innovation Enhances Efficiency Where Every Nanosecond By Bob Laliberte, ESG Senior Analyst; and Leah Matuson, Research Analyst(BENE eserseoee em trea ia Contents Introduction: Every Nanosecond Matters nnnasnnsentnnn 7 Network Challengesnnnsnnnsnsttnnanntniinnn Optimiaing HFT Environments Usizing a Nest generation Platform f Key. 4 Intent-based Network Logi Is Essential 5 5 Eliminating the Potential for Network Latencios Cisco Utra ow Latency (ULL) Portflio Gains Strength with Exablaze Acquistion. Caco High Performance, Flexible Connectivity Switches 7 ‘isco Nexus 3548XL and Switch Management via Cisco Data Center Network Manager. 7 ‘isco Nexus 3550 Series formerly Exablare ExaLINK Switches) 7 ‘isco Nexus Smart (formerly Exablaxe ExaNIC) 8 son “he Bigger Th ennsennnna : Introduction: Every Nanosecond Matters ‘The speed of business continues to rapcly accelerate, especialy for erganizaionsin the financial sector, and partcuasly Inthe high frequency trading [HFT] market. HFT i an ultrafast, computerized tracing strategy using complex algorithms to ‘analyze multiple markets and execute orders besed on market conditions So i's no surprise that every nanosecond ‘matters because any inereasein network latency could potentially esuitin millions f cellars in lost revenue and profit With an average transaction taking a fraction of asecond to Any delay between receiving market complete, francial organizations ve ocused on teamining. | data and making a trade could cae a oo pes conan area ae potentially result in millions of dollars in eis transacted, blink our ees. The ink of ane takes 3 fraction of a second. If each second comprises 1,000 test revenue and profit milisecods, ink takes approsmately one third ofa second? Ensuring the transaction process remains lightring fat rom beginning to end means understanding thefactors contributing to latency throughout the process, Thess factor incase computa, data processing algonthms, and network, With thisin ming, itis imperative for organizations to optimize each area White networkctypically epresents approximately 10% of the HFT process itso key foundational layer and an even Improve compute capablities. Organizations engaging in HFT must leverage innovative ultraow latency (ULL) solutions to minimize latency aed accelerate eficiency-bult there aea variety of challenges that must be addrezce. Network Challenges High requoncy trading applications must be able to hancle a number ofroquirement thatinclude ultra-low latency food and rapid analysis and data correlation. Consequently, chen itcomes to deployingan ultra latency network to meet their unique business needs, organizations musts poised to tackle any iecuesthey may encounter. These nclise + Proximity tothe nancial exchange I's vital to understae'that proximity dictates latency. Organizations have tobe calocated ith the exchange orsitfer a competitive ciesdvantage. Today, most exchanges have expanded their data center locations to eccommodate and provide eech organization with latencyneutal connection to levelthe Playing eld (see Figure 1). This requires organizations to lock elsevinere to gain an advantage.Figure 2, The Value of Colocating with the Exchange Caco Naas Ure ow Latency Sots Ace igh Frequency Trading ‘ == Seat, HOME Latency dueto outdated switches, Due othe intense cornptiine pressu upgraded to ensure the lowest possible latencies Legacy environmer latest generation of lr fa latency snitches, these enwiconments are constantly bing shave to make way to innovation at the Disparate vendor solutions. Networks comprising multiple, csparate vendors could impact ecient they restrict the ability fererganizaionsto have holistic visblty and contro actossthe end-to-end network environment. Asa result, network erdiors with comprehensive portflis will have an acvantage, Ralance on legacy compute architectures. In ltralow latency environments, pushingall processing tothe central processing units (CPUs) snot an option. Orgenizations have to leverage solutions that enable tne sensitive processing to take place closer to the exchange; essentially, this means adopting field programmable gate aay (FAs) tomrecute certain functions atthe edge ofthe server. Inablity to rapidly madlfy applications. Orgonizations cart be helé beck hen trying to change an algorithm or ‘modify applications. To remain competitive anct adept ta rapisly changing market dynamics, organizations nee to make changes quick, regerdess of where the applications resie (CPU or FPGA. ln these highly dynamic anc time ‘sensitive environments, changes need tobe made as quickly and easly as possibleic Nes tra ow Latency Slaton Ace High Frequeney Ta 1s no surprise at legac plattorms re incapable of supporting net generation data certers end om while Network Te Protocl (NP) has prewged millsecon-eve timing in packe-batec netrk, nthe nal industry land especially inthe high frequency trading arena, illsecond-leva timing inadequate for organization to achiev isbity ino every rocessoccuingonenetwork A | F “ platforn must be able to deliver the lowest possible latencyand_| High frequency trading requires a next- ahigh performance switch environment, incorporating, generation platform that can deliver tanosecond lane biionth of second witches and ultra-low latency, high availability, and picosecond onettionth of secord te stamping sociiy With suse stimannesnient plications. Intent-based Network Logic Is Essential Forhigh frequency vading environments, anintent-based network BN) could bea significant upgrade Theabily to implement closed loop automation that does not require human intervention (other than to define the intent or polices required) could dreraticaly improve operational eficiency. Based ona combination of machine learning (Mt) and orchestration, IBN allowsIT to easly define polices detaling businessintent o physical and tual cevices across the network-without having to rely on time-consuming, manual commandline interfaces (CL). Once cefined, IBN automatically applies these polices to every device onthe network, ensuring policy and orchestration operate a define by busines intent. The abil toerten IBN modesto the elt programmable gate array level could significantly improve HFT environments, affciontly orchestrating or altoring processes automaticaly. Sco Figure2 to understand how theso technologies fitinto an Intent based networking strategy Figure 2, Cisco's Intent-based Strategy Diagram eeea . 380,000, to accommodate high requency trading processes within the exchange, eliminating the potential fr WAN latencies, ‘with thisin mind, where can financial organizations tum for help in achieving and maintaining success with thei HET seiviies? Enter Cieco and Eablaze Cisco Ultra-low Latency (ULL) Portfolio Gains Strength with Exablaze Acquisition -Asvoldide networctachnology laser, Cece continues to evolve andinnavate acres all areat—ftom harcware and oftware, to pies end silicon Ciscsrecent acquisition of Exablaze FPGA based network products, technology, and engineering ttf will enable Cisco to deliver a more comprehensive patio of next-generation, ultra-low latency solutions. Exablaze, a designer and manufacturerof advances netiverk devices thatreduce latency, ill sugment Ceco' trong domain expertise inthe financial markets, stlengthering Cisco's existing portfolio of ULL solutions arid complementing Cisco's curent switching technology with ultra Low latency network switches and FPGA based smart network interface cards (NICS) Cisco's intent based networking strategy (se2 Figure 2] comprises investments that span in-house innovation, strategic acquisitions, and partnership. Cisco's focus on ASIC and programmable FPGA. based next-generation platforms willbe significant in building future platforms for ultra low latency applications~enabling nebwotking and security a scale, allpowered by analytics. To that end, Cisco will continue to integrate the ULL technology developed inthe HFT proving grounds—think igh performance computing, artificial intelligence, ane machin learing (.). I addition Cisco iscommittedto supporting Exablaze products and services and is ecending the roadmap forall existing customers. ‘with Exablaze, cisco offers a comprehensivetine of enhanced ULL solutions to assist nancial and HFT custome, helping thor achive their unique technology and business objectives, ard supporting ther businescrtical workloads. These include «+ Shitches, smart network nterace cards (NIC), development bose igh precision timing products IP, and apslicatons, encompassing ¥ Ultra ow latency hardware, softwar, and fimware design *# FPGAbased network swtchesand ULL NICS + New-generation architecture for future AML activites 1 High bandwicth network capture, analytics, and NYMe SS crives, © Firmware development kits (FDKS).Ss : Cisco High Performance, Flexible Connectivity Switches withthe acquisition complete, the integrated lineup ofnext generation, ultra-low latency solutions comprise the fllowing Cisco Nexus 3548XL and Switch Management vie Cisco Date Center Network Manager Bult from switch on-2-chip architecture (Se), the Cleco Newus 35424 snitch ie pattofthe Ceco Nexus 3500 series of switches offering line-rate Layer 2 and 3suitching at ultra-low latency, ana high performance with exible connectivity. The snitch runs the Cisco NX-OS network operating system, offering comprehensive troubleshooting capabilites, sale, and Layer 3 feature sets fr network session management, gateway traffic management, and multicasting needed by ceichanges an high frequency tracers Cece Data Center NetworeManager (OCH) enhances Gata canter implementations by offering organizations comprehensive management for Cisco News, and mulblayer dstbuted switching (MDS) datacenter LAN and SAN witching deployments (inclusing contol, automation, mentoring, visualization, and troubleshooting, Introduced in 2011, the Nexus 3548 included innovative features forhigh frequency trading enirarments, namely the Cisco ‘Algorithm Boost technology (Aig Bcost uiltnto the svitch application specif circuit (ASIC to realize Layer2 an Layer suiting latencies of less than 200 nanaseconds(ns While Layer 3 switching at scale vith a “normal mode" latency of 250ns remains of utmost ned todey, Layer 1 technology introduced by Exablazeisrnow much better suited for trac replication to and aggregation fom trading servers, naturally displacing te appeal of WARP features or Neus 3548 for rnanozscond chases. Cisco Nexus 3550 Series (formerly Exablaze ExaL NK Switches) ‘Aecording to Cisco the Heras 350 sovios offers the lowest latency among marketplace solutions. Formerly Exablaze snitches, the News 2550 series devices deliver ultraloa latency switching and multiplexing functions, precision time stamping, and programmability to tacltate miseion-etical ntwork aplication. Nexus 3590-F and 3550-H Layer -only products allow for data monitoring and dstbution applications to run with port-to-potlatencies of ess than Sns, anc witches with embedded FPGA components include additional “smart” features. Aggregation and Layer 2 features including MAC learning (LAN tagging/rurking, and \GMVP snooping are mace pcesble, with packet latencies remaining below 100nein most cases {All Nesus 2550 saitchas have ting synchronization and clocksyntonization capabilities. The Nexis 2550-F HPT models ‘ecicated to time stamping functions andisthe highest precision network aggregation and monitoring solution available con themarket. These capabilities and functions hep ade design thet network with deterrinsti timingschemesin order to avoid cat cangestions and packet cellzions over non IP circuitry. “Thened-gen News 3550 series offer:a : Cisco Nexus SmartNIC (formerly Exablaze ExaNIC) High frequency trading requites high perlormance computing slutions, The Cisco Nevus SmartNC formerly Exablaze ExaNIC) complements isco ASIC and FPGA investments enhancing inlent-based networking—ke forfinancial and HET organizations that require high performance and instantaneous connectivity with ultra-low latency torun trade algorithms, submit transactions, ana receive stock ticker Feees, ‘The News SmartNIC ultretow frequency network interface card incorporatesits own silicon, allowing certain retwork functions and trade processing to be afloaded from the CPU to reduce latency The solution ix86-compliant, and ‘optimized for extremely high performance, offering upto 10xlatency performance when optimized with Cisco software and tools organizations can enjoy high precision time-stamping an time synchronization features, ital for packet capture. And because all News SmertNIC adopters re FPGA based, adapter life can be extended by allowing feld upgrades, while users can ake advantage fits software programmable functionally leveraging ftmware development kits FDKS) ‘The Bigger Truth ‘The HFT market demands the lowest posiblelatencies, where every nanosecond matters, and any delay will iggera negative impact tothe botter line, isco understands the tical of thie delicate balance, and is commited to Aelveng next-generation, FPGA-based switching platforms and smart network interface cardsto address the rapidly rowing demans fru low lateney nator performance optimization for missen-etical=ystems—but they're not eoingit alone, An indispensable part ofthis commitmentisthe Cisco acquision of Exabaze Together, Cisco and Exeblaze will address the grossing need for performance-optmized networking with next-generation suiting platlorms and smart network interface cards. To that end, isco is ensuring support for Exablaze products and services, and extending the roadmap forall esting customers. Cece’: innovative ULL News 3550 and Nevus SmartNIC platform offer the bereft, suppor, and engineering resources to enable organizations to accelerate the time to value. By incorporating nest generation technology developedinthe HFT proving grounds nt itsnetworkng platforms, Cisco (with Exablaze wil expandlthe reach of his technology to enable high petformance computing tifa iteligence, anc machine learning envicrments. To learn more, please visit Cisco online: he .sco.come/en(us/roduets/switches/nexss-3550-seris/index ht http:/wucsco.come/en/us/roducts/intertaces-modules/newus-smarnifindex htm What is low latency?Thepubeatenecopegedby The PRB tester csr ot nnn an nse evento HEIGS sizc ndsctonseinsetto repeal communis fo lerrsesea en @& comacsee ytatcon 2 sxe (© 200 by Teneprie step Group ne Aight