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Latency arbitrage Meaning

A high-frequency trading strategy that exploits the tiny time differences in the reporting of an asset's price across different exchanges. If an asset’s price moves on Exchange A, a latency arbitrageur uses ultra-fast connections to buy or sell that asset on Exchange B before the price update arrives there.

This type of trading is a "race to the bottom" where only the firms with the fastest hardware and the closest physical proximity to the exchanges can win. It is often criticized for being "predatory," as it can drain liquidity from slower market participants who are essentially trading against "stale" information.

To combat this, some exchanges have introduced "speed bumps"-intentional delays of a few milliseconds-to level the playing field.

Others use "batch auctions" rather than continuous matching to ensure that speed is not the only factor in determining who gets to execute a trade at a specific price.

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Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

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