Ultra low latency describes a computer network that is optimized to process a very high volume of data packets with an extraordinarily low tolerance for delay (latency). These networks are designed to support real-time access and response to rapidly changing data.
What is the latency tolerance of ultra low latency?
Ultra low latency describes an elite subset of low latency. Today, “ultra” low latency is measured in the hundreds of nanoseconds with only speeds under 1 millisecond qualifying as ultra low. As ultra low latency benchmarks improve, the definition of what is ultra low vs. simply low latency will undoubtedly become even more restrictive.
Where is ultra low latency needed?
Today, ultra-low latency is almost exclusively used in capital markets firms to support high-frequency trading systems. High frequency trading is entirely automated, with trades executed based on the processing of algorithms that optimize trades based on the changing market prices. Capital markets firms compete on the speed with which these algorithms can be processed and trades executed. Therefore, investing heavily in ultra low latency infrastructure is often justified.