Not a day goes by when some esteemed journal doesn't give an informed opinion on the importance of reducing Latency in trading systems. Indeed it's rapidly becoming an arms race between major trading venues offering faster and faster access to more and more data. With increasing data volumes, reducing order sizes and trading margins and increased volatility some folks are predicting an impending data storm.

And now the clever, high velocity traders in the hedge funds have got in on the act. No longer is statistical arbitrage as popular as it once was - with increasing levels of volatility seen in the markets mean reversion based models are struggling to make the money they used to. Never ones to miss a trick, these folks are now looking to arbitrage the millisecond latency differences between the existing trading venues and the new trading venues that are coming to the market here in MiFID land.

If the traditional trading venues don't evolve rapidly they will be in danger of finding their liquidity rapidly moving to these new venues where there is lower latency risk and inherently better execution.

 To folks using these new venues it will be an opportunity to optimise their trading strategies and maybe even participate in the latency arbitrage game. However, for the folks that stick with the more traditional (and supposedly more liquid) venues, slower liquidity will by it's very nature become a curse.

 But like all great opportunities, once traders start to make money from an anomoly in the market then everyone piles in and the anomoly disappears very quickly. My guess is, if you're not already in the game it may already be too late. Then again, maybe not.