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The bank currently provides its inter party latency numbers to select clients, but has decided not to provide it as a general offering due to lack of transparent data, according to Kevin Twitchen, executive director with Morgan Stanley.
Until a firm can get an overall picture of all the market centers in which it operates, it’s difficult to give these latency numbers out, he says.
To provide the needed transparency, Morgan Stanley officials announced today, Oct. 12, that the bank will use the CorvilClear inter party latency monitoring platform from Corvil to monitor the bank’s execution venues and the vendor’s CorvilNet to monitor, analyze and optimize its market data plants in New York and London.

“What I really want out of Corvil is basically to give my clients transparency of the inter-party latency,” explains Twitchen. “There are a lot of quoted latency numbers-venue marketing numbers and real numbers. I’m only interested in real numbers.”
“Overall, the momentum is toward greater transparency and detailed access to latency information,” says Donal Byrne, CEO of Corvil.

Being able to deliver independent latency TCA numbers is still a ways off, as the only trading venue that has publicly announced the implementation of CorvilClear is multilateral trading facility (MTF) Turquoise, which did so earlier this year (DWT, April 20). Corvil has been in discussions with other major venues, but cannot comment presently, says Byrne.
In the meantime, Morgan Stanley spent a number of months evaluating the Corvil platforms and plans to start putting them into full production deployment.

“We were looking at our one target MTF and used the product in production to see if it was actually going to deliver,” says Twitchen. “Saying it’s not in production is not strictly true since it had to be in production to make the decision.”

The bank will initially use the collected latency data to ensure that its trading infrastructure performance meets market needs and helps it make wise investments in its upkeep.

“[The platform] allows me to see if my systems are scaled properly for any economic event and whether my partners’ systems are suitably scaled for a market event,” says Twitchen.

Morgan Stanley looks to deploy the technology in the cash equities and foreign exchange (FX) space, says Twitchen.

“We will be deploying this technology across other asset classes as required,” he adds.

The overall deployment is happening as part of the regular incremental upgrade of the bank’s infrastructure, including the move to the next generation of Linux servers.
The bank will start deploying the new technology in the North American and European markets, where there is more liquidity fragmentation and the matching rates are faster, says Twitchen. Deployment in Asia will follow, since the liquidity fragmentation is just beginning there, he adds.
Eventually, Twitchen says he can see feeding the inter-party latency data into Morgan Stanley’s smart router to help identify predictive patterns in the future.

“[It’s] something I’m considering at the moment, but it’s not job one,” he says.

Rob Daly