As per our research report, the global high-frequency trading infrastructure market size was valued at USD 387.9 Mn in 2020 and is projected to witness a CAGR of 3.5 % from 2022 to 2027. The growing need for ultra-low latency in the trading ecosystem, the advancements in quantum computing in financial services, and the need for intent-based networking conducive to a high-frequency trading environment are majorly driving the growth of the industry.
Market participants have focused on increasing their investments to develop sophisticated technologies to reduce network latency in recent years. A High-Frequency Trading infrastructure is comprised of high-performance computing applications which implement AI as well as deep learning capabilities. These servers allow traders to conduct trade in milliseconds and predict stock market trends. To perform rapid data analysis and correlation, a high-frequency trading environment requires an ultra-low latency feed that helps manage multiple orders. Trading firms have located their data centers closer to the stock exchanges to provide faster feeds for trading applications as proximity to a stock exchange helps trading firms to get high bandwidth networks with low latency connections. The demand for HFT applications is increasing in firms offering hedge funds and large investment banks.
Over the next few years, algorithmic-based trading in equity markets is likely to gain momentum. By helping equity traders in implementing and modifying stop-loss strategies. Integration of stop-loss strategies with HFT systems is expected to help trading firms in preventing losses and managing risks, as stock markets are volatile and unpredictable. This is further creating opportunities for servers supporting these applications.
Technology as an enabler
The technological advancements made over the years largely contribute o the emergence of the High-Frequency Trading Infrastructure Market. Trading firms have been working to ensure that their systems have as low latency as possible over the last several years. This allows firms to receive and process information as fast, or faster than their competitors. The enormous growth seen in High-Frequency Trading Infrastructure has been driven by easier access to modern technology.
Increase in ICT spending
The increase in ICT spending for hardware, software, services, and new technologies is anticipated to propel market growth over the forecast period.
Faulty and improperly tested algorithms can cause severe and undesired consequences. Firms need to ensure that the algorithms are tested completely and thoroughly before deploying them on live systems. There is a need for robust testing of these algorithms and programs for all stages.
There are some technological barriers that firms need to consider such as extremely low latency demands, significant investments in high-speed networks and co-location facilities, and acquiring high volumes of market data. These need to be considered by those seeking to enter the High-Frequency Trading market.
Several risks are faced by HFT firms such as market, technology, and compliance risks. Any change in the market can have an unexpected impact on the outcome as the algorithms that control HFT are based on several assumed market conditions. Firms also need to monitor compliance and technological risk.
Based on the processor, the x-86-based processor segment accounted for the largest revenue share of over 80% in 2020. This is attributed to the large-scale adoption of x-86 core processors and industry dependency on software code based on the x-86 architecture, compatibility of x86 processors with high-computing applications, such as AI and data analytics that perform computing executions at a faster rate.
The ARM-based processor segment is anticipated to register the fastest CAGR over the forecast period owing to the increased adoption of cloud-based migration tools that help vendors port server applications on ARM architecture. ARM-based servers cost comparatively less than X86 chips, thereby contributing to the segment growth.
Based on form factor, the 2U segment accounted for the highest revenue share of over 42% in 2020 and is projected to expand further at the fastest CAGR during the forecast period. The 2U form factor offers greater flexibility in singular chassis enabling high-speed transaction on several computer systems, allows SMEs to scale up IT infrastructure at a lower cost, and offer high computing and execution of high-performance workloads, such as high-frequency trading computing applications. All such are expected to drive market growth.
The 4U server segment is expected to register the second-highest CAGR during the forecast period. This growth can be attributed to the increased adoption of virtualized data centers and improved scalability with up to eight full-height and full-length PCI Express slots. However, these servers also pose challenges due to high power consumption and low storage capability.
Based on application, the equity trading segment accounted for the largest market share of over 41% in 2020 in terms of revenue. This is attributed to the high penetration of HFT trading platforms, particularly in large-cap equity markets.
Foreign Exchange (FOREX) market is anticipated to emerge as the fastest-growing segment during the forecast period. The adoption of HFT in forex markets has been influenced by the success of equity trading, creating avenues for growth. HFT servers with low-latency features allow forex traders to facilitate high-speed transactions and process large volumes of data.
Geographically, the North American High-Frequency Trading Infrastructure Market accounted for the largest revenue share of over 40% in 2020. The early technology adoption and penetration of trading platforms in the region, along with the presence of leading vendors, such as Dell Technologies, HP Inc., and Hypertec, are providing necessary technical assistance for financial companies to deploy after-sales services, and adoption of algo-based trading in secondary markets for high-speed trading execution is expected to propel the demand for High-Frequency Trading servers over the forecast period.
The European High-Frequency Trading Infrastructure Market has a significant share in the global HFT Infrastructure market and is anticipated to grow over the forecast period.
The High-Frequency Trading Infrastructure Market in the Asia Pacific is expected to be the fastest-growing regional market with the highest CAGR during the forecast period. This is attributed to initiatives undertaken by the Chinese government to promote automated trading in financial markets. Due to the early adoption of HFT systems, developed economies, such as Japan are anticipated to experience gradual growth over the forecast period. However, the lack of technical skillset and proper IT infrastructure may hinder the market growth.
The Latin American High-Frequency Trading Infrastructure Market is projected to be growing during the forecast period as high-frequency trading is starting to get a grip on Brazilian stocks. Markets like Mexico and Colombia are encouraging major U.S. trading firms to bring their latest trading techniques to the region,
The High-Frequency Trading Infrastructure Markets in the Middle East and Africa are expected to grow in the coming years due to rising demand for HFT applications in big investment banks & enterprises and the growing requirement for intent-based networking, which is beneficial to the high-frequency trading market environment. However, the lack of technical skillset and proper IT infrastructure may hinder the market growth.
Major Key Players in the Market
Companies playing a pivotal role in the High-Frequency Trading Infrastructure Market are:
1. ASA Computers, Inc.
2. Blackcore Technologies
5. HP Enterprise Development LP
6. Hypershark Technologies
8. Penguin Computing
9. Super Micro Computer, Inc.
10. Tyrone Systems
NOTABLE HAPPENINGS IN THE GLOBAL HIGH-FREQUENCY TRADING INFRASTRUCTURE MARKET IN THE RECENT PAST
Expansion- In march 2022, Lenovo declares the extension of its worth Oriented Workstation Offering with the Introduction of the ThinkStation P360 Tower and Tiny, which are great for specialists and fashioners that work with clock-speed-driven 3D applications as well as AI experts and information researchers chipping away at more modest estimated projects and datasets.
Partnership- In march 2022, Lenovo Announces Global Partnership with Wine to Water, Providing Clean Water Access to Underrepresented Communities Around the World. This long-term arrangement sees Lenovo support W|W's main goal to help the life and pride of all, through its all-encompassing local area WASH (water, disinfection, cleanliness) programs in Nepal and The Amazon district, Water4Schools, and different catastrophe alleviation.
Product Launch- Cheops Technology chooses HPE Green Lake to grow and improve its cloud administrations portfolio for its clients. Cheops Technology needed to track down an approach to effectively and immediately grow its administration list and installed new clients, without delays. HPE GreenLake permits Cheops Technology to oversee vacillations from its clients while keeping a strong, high accessibility arrangement
The outbreak of COVID-19 has changed the business environment for numerous organizations and put the global economy in a disastrous phase. There was a widespread threat to financial companies from the pandemic disruptions. However, High-Frequency Trading companies are among the very few to benefit from the pandemonium in financial markets when the stock and bond market volatility soared, and trading volumes boomed for assets from derivatives to foreign exchange.
Chapter 1. Global High-Frequency Trading Infrastructure Market – Scope & Methodology
1.1. Market Segmentation
1.3. Research Methodology
1.4. Primary Sources
1.5. Secondary Sources
Chapter 2. Global High-Frequency Trading Infrastructure Market – Executive Summary
2.1. Market Size & Forecast – (2022 – 2027) ($M/$Bn)
2.2. Key Trends & Insights
2.3. COVID-19 Impact Analysis
2.3.1. Impact during 2022 - 2027
2.3.2. Impact on Supply – Demand
Chapter 3. Global High-Frequency Trading Infrastructure Market – Competition Scenario
3.1. Market Share Analysis
3.2. Product Benchmarking
3.3. Competitive Strategy & Development Scenario
3.4. Competitive Pricing Analysis
3.5. Supplier - Distributor Analysis
Chapter 4. Global High-Frequency Trading Infrastructure Market Entry Scenario
4.1. Case Studies – Start-up/Thriving Companies
4.2. Regulatory Scenario - By Region
4.3 Customer Analysis
4.4. Porters Five Force Model
4.4.1. Bargaining Power of Suppliers
4.4.2. Bargaining Powers of Customers
4.4.3. Threat of New Entrants
4.4.4. Rivalry among Existing Players
4.4.5. Threat of Substitutes
Chapter 5. Global High-Frequency Trading Infrastructure Market - Landscape
5.1. Value Chain Analysis – Key Stakeholders Impact Analysis
5.2. Market Drivers
5.3. Market Restraints/Challenges
5.4. Market Opportunities
Chapter 6. Global High-Frequency Trading Infrastructure Market – By Processor
Chapter 7. Global High-Frequency Trading Infrastructure Market – By Form Factor
Chapter 8. Global High-Frequency Trading Infrastructure Market- By Application
8.1. Equity Trading
8.2. Forex Markets
8.3. Commodity Markets
8.4. Bonds and Other Derivatives
Chapter 9. Global High-Frequency Trading Infrastructure Market- By Region
9.1. North America
9.4. Latin America
9.5. The Middle East and Africa
Chapter 10. Global High-Frequency Trading Infrastructure Market – Company Profiles – (Overview, Product Portfolio, Financials, Developments)
10.1. Company 1
10.2. Company 2
10.3. Company 3
10.4. Company 4
10.5 Company 5
10.6. Company 6
10.7. Company 7
10.8. Company 8
10.9. Company 9
10.10. Company 10
Primary & Secondary Sources to Collect & Validate Data
Utilization of Both Top Down & Bottom Up Approach
Holistic Research Methodology
Scope & Introductory Research
In the initial stage of research, the scope for market is defined. In order to better understanding of the market, secondary focus is on different segmentations of the market. Preliminary research involves identifying key data points related to the market under consideration to estimate the market sizes to the best extent.
Based on the scope of the market and the key data points, a number of secondary sources are considered. This data collection stage consists of a team of analysts who gather data from various secondary resources, accessing proprietary databases and primary research by reaching out to key market participants and opinion leaders.
At this stage, collected data using several sources is arranged in structured format. The sources include industry participants, in-house models, key opinion leaders in the market ecosystem and databases. Historical data trends are established at this point, and compared to the current scenario. Based on the macro- and micro-factor prevailing in various geographies, proprietary data models are used to analyze key market countries. Key players in this market are listed based on their capabilities in revenue, sales, and development. The study also involves the identification of companies in the category of 'new entrants' and their potential effects on the market.
At this stage, the analyst team moves on to understand how the market has changed over the years. The total size of the market is gathered after an study of different business segments and end-users is done. An impact research is also done to see what factors will/may influence the market in the years ahead. The effect of various variables on the industry is often taken into account when forecasting market sizes.
Data verification is conducted at all research levels, however this stage is dedicated to more rigorous checking of the data points. At this stage, the estimated data is triangulated with company revenues and checked with industry experts including several senior executives and key opinion leaders in the market. The data is then summarized, and the findings are derived from the same for the report.
Quality Assurance & Report Preparation
Holistic research methodology is followed with combination of Top Down and Bottom Up approach to undertake the estimation and forecasting task in order to ensure quality of data. At this stage of the research process, a dedicated QA team checks the data and approves after several predefined checks. Each section is checked and questioned to make the report accurate and reliable. In case of discrepancy, a team of analysts reviews the issue, and the whole process is repeated again. That significantly improves the report's quality. After approval, all the parts of the report are brought together and is formatted by highly trained team thus making it ready to dispatch.