Market trading individuals and firms buy and sell equities (stock traders) or currencies (Forex traders) or other financial assets. Regulations in the United States and Europe (OATS, FINRA, MiFID 2) require all stock market transactions be timestamped to clocks that are synchronized and traceable to Coordinated Universal Time (UTC). These clocks are maintained at metrology institutes such as NIST, PTB and NPL. The trend over the past decade has been to obtain increasingly accurate timestamps via network time synchronization. First, using the Network Time Protocol (NTP) that achieves a typical client accuracy of 1/2 - 2 milliseconds, then progressing to the Precision Time Protocol (PTP/IEEE-1588) that can achieve 100-nanosecond accuracy. PTP is required to meet the most stringent requirement of 100-microsecond timestamp accuracy on certain classes of trading.

High-Frequency Traders

One breed of market traders are High-Frequency Traders (HFT) that use computer-algorithmic, high-volume, short-term trading. HFTs can perform thousands or millions of trades per second, and push the state-of-the-art in terms of network timing accuracy. They co-locate their computer equipment only meters away from the market center computer equipment. Doing this greatly reduces latency, giving these firms advance knowledge of market data just milliseconds or less before other market participants. In these days of high-speed computers, a few milliseconds is a great advantage. They, of course, must also abide by the FINRA and MiFID 2 timestamp accuracy regulations.

Using PTP/IEEE-1588

These co-located HFTs require very precise UTC time to track orders in the market by placing timestamps in their buy and sell messages. Most HFTs have many computers running on a dedicated Local Area Network (LAN). Typically, each LAN has a PTP Grandmaster Clock and each computer on the LAN is synchronized to the Grandmaster. These parallel, high-speed computers must be accurately synchronized for the algorithms to process market data, and accurate timestamps are a crucial factor in the success of any HFT and regulatory compliance.