[Beowulf] Pricing and Trading Networks: Down is Up, Left is Right

Vincent Diepeveen diep at xs4all.nl
Fri Feb 17 07:42:35 PST 2012

On Feb 17, 2012, at 3:12 PM, Lux, Jim (337C) wrote:

> On 2/17/12 1:11 AM, "Vincent Diepeveen" <diep at xs4all.nl> wrote:
>>> I don't know of any million dollar FPGAs.  Even space qualified big
>>> Xilinx parts are about a tenth of that.
>> Most software has a price of a couple of tens of thousands of dollars
>> a month.
>> The FPGA's are a multiple of that.
>> the IBM websphere bla bla that can be used to parse market data and
>> trade, it's around a $100k a year.
>> Add some tens of thousands for additional functionality.
> Are you talking about the software cost, not the hardware platform  
> cost?

  I thought it was obvious from what i wrote it's solution costs.  
Traders usually buy in ready
solutions - a few hedgefunds excepted.

> If so, I'd go for that.. The population of FPGA developers is probably
> 1/100 the number of conventional Von Neuman machine developers (in
> whatever language).
> Interestingly, such a scarcity does not translate to 100x higher pay.

I'm not a  magnificent FPGA developer - i'd say first speedup the  
software - there is so many traders
real slow there. But they don't even are interested IN THAT.

> Most of the surveys show that in terms of median compensation FPGA
> designers get maybe 30-40% more than software developers.

The rate for development is $1 an hour in india. If you deal with  
major companies in India it's $2.50 an hour
including everything.

> I guess there's much more than 100x the demand for generalized  
> software
> developers.

How good are the 'generalized software developers' they are hiring  
actually to do their development?

Suppose you just hire JAVA guys and girls. Now ignore the quants of  
course, what language they develop in is not so important
as you can easily parse that to your own solution.

Besides i'd guess, but have no information there, that most queries  
to trade are actually dead simple decisions.

> I wonder if the same is true of GPU developers.  A slight premium  
> in pay,
> but not much.
>> Getting a FPGA a tad higher clocked from Xilinx, say the first sample
>> at 22 nm, is probably not cheap either.
> The biggest, baddest Virtex 7 (XC7V2000TL2FLG1925E) is a mere  
> $132k, qty 1
> (drops to $127k in qty 1000)
> (16 week lead time)
> 2 million logic cells 70 Mb onchip block ram, 3600 dsp slices, 28Gb/s
> transceivers, etc.etc.etc.

how high that would clock?

note you also need to integrate the fastest 10 gigabit nic - right  
now that's solarflare.

> To put it in a box with power supply and interfaces probably would  
> set you
> back a good chunk of a million dollars.

if you'd do it in a simple manner sure - but if you're already on  
that path of speed and your main income is based upon speed you
want something faster than what's online there of course.

You phone xilinx and intel and demand they print fpga's before  
printing cpu's in a new proces technology, and clock 'em as high as  

I would guess that's not a beginnersteam and has several members. you  
soon have an expensive team there, in terms of salary pressure i'd
guess it's around a 4 million a year minimum.

That's not a problem for the hedgefunds to pay actually.

If you buy things in it's also a seven digit number a year.

I do believe however there is enough room for a good software  
implementation to make great cash based upon speed.

The rule is you need to be within the 10% fastest traders to make a  

That might or might not be true when it's based upon speed. Many  
trader groups are just busy with 1 specific part of the market - say  
for example oil companies.
Most are experts at just 1 tiny market.

For them i'd suspect a software implementation that gets them in the  
top, would already make them very effective traders.

There is limits on what you are allowed to sell in quantity,  
meanwhile the total trading volume in derivatives keeps growing, so  
you sure can make
great cash if you're amongst the fastest and not necessarily need to  
beat the top trading hedgefunds.

For me it's incredible that there is so little jobs actually for  
trading in imperative languages and basically 99.9% of all jobs are  
Java there.

I just simply would never do business with jpmorgan chase. they seem  
to hire 0 persons who are busy imperative or even in C++.
Basically means that the entire market of genius guys who know how to  
beat you in game tree search, which is about all artificial  
intelligence experts,
they're shut out from majority of companies to get a job there.

The way to get a job is to be young and have a degree in economics.

Now a year or 10 ago that might've been most interesting in the  
trading world - but things have changed. Derivatives market back then  
was ultra tiny,
right now it's of gigantic proportions, trade volumes have exploded,  
so the traders simply didn't see how some others who make a profit  
innovate - and those
  sure keep it a BIG secret.

 From my viewpoint however it's a very dangerous thing what happens  
there. At military level secrets they try to keep secret - yet there  
is no commercial money
involved such as in the trading world, where even knowing 1 sentence  
here can make you major cash.

Government is even more behind. You first have to prove that speed is  

Well i do know - i come from computerchess - if majority of decision  
taking is so dead simple in trading (so the patterns),
compare 2 things then based upon that take a decision, obviously it  
means that speed is everything.

If i look at IBM, i guess it took them until 2008 to really put an  
improved trading solution at the market.

I'd take that and just make a dedicated trading framework that's 10x  
faster than that (so that means parsing the market data and integrated
take the trading decisions).

Though there are hundreds of thousands of trading groups world wide -  
google a bit around - you'll just find Java jobs.
99% of the traders are just clueless whom to hire i'd guess.


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