Lavlatenshandel

Lavlatenshandel, or low-latency trading, is a set of trading practices and the infrastructure designed to minimize the time between market-data reception and order execution. The goal is to gain a competitive advantage by reacting to market information as quickly as possible, often measured in milliseconds or microseconds.

Key components include direct market access, co-location near exchange matching engines, ultra-fast networks (fiber and microwave), hardware-accelerated trading engines (FPGA/ASIC), and software optimizations such as kernel bypass, low-latency messaging, and efficient order routing.

Common strategies include market making, latency arbitrage, and other algorithmic strategies that capitalize on small price moves. Participants are typically professional trading firms, hedge funds, banks, and proprietary trading desks.

Impact and regulation: The practice can improve liquidity and narrow spreads but has drawn scrutiny for potential unfair advantages and market fragility. Regulators consider access fairness, transparency, and stability. Some venues have introduced measures like speed bumps or revised market rules (example: IEX's speed bump) to moderate latency competition.

See also: high-frequency trading, algorithmic trading.