Citi Taps RTI Middleware for Algorithmic Trading

Citigroup has deployed low-latency messaging middleware from Real-Time Innovations (RTI) in support of its global equities trading business. RTI officials confirm a new major deployment of its product at a "flagship" customer but decline to name it as Citigroup. Initial rollout is in Manhattan and in Carteret, NJ.

RTI's Data Distribution Service (DDS) messaging platform will be used by its new customer for market data distribution and algorithmic trading applications, says RTI's CEO Stan Schneider.

The Carteret, NJ, deployment is a co-location with Nasdaq's matching engines, which are located at 1400 Federal Blvd. Schneider characterises the customer win as a "marquee deal" that the company has been working on for two years, and which was won against formidable in-house and third party competition.

The win is "hugely important" for RTI, adds Schneider. Bagging the high profile and demanding Citi business has been central to the vendor's strategy in financial services, sources say, likening the deal to the breakthrough that the then upstart Teknekron Software Systems achieved at Salomon Brothers in the late 1980s.

That deal established the vendor - now Tibco - as a major player in financial messaging middleware and is generally regarded as a game changing financial technology industry event. RTI claims several advantages for DDS over competitive products, including its ability to maintain low-latency communications at periods of high data throughput, such as at market openings and closes, when opportunity to make the most from trading opportunities is the greatest.

It is a characteristic that is "not trivial" to achieve, says Schneider. Schneider attributes RTI's performance to its peer-to-peer design, removing the need for daemon and router processes running on a separate tier of servers, and so reducing network hops.

This both boosts performance compared to hardware appliance-based competitors, like Tibco, while also reducing the hardware footprint and associated power and cooling costs needed to run the messaging platform. Compared to other peer-to-peer messaging products, such as from rival 29 West, Schneider claims that RTI's automatic discovery for publisher/subscriber integration makes configuration less complex.

DDS's standards-based pedigree - it is based the Object Management Group (OMG) Data Distribution Service for Real-Time Systems (DDS) standard - is also an advantage because of the widespread technical knowledge and skills that exist, as well as other implementations, which mitigate deployment risk. RTI's other heritage is in real-time systems for the aerospace and defense industries, which are just as demanding in their latency needs, Schneider says.

RTI has previously installed DDS at Automated Trading Desk (acquired by Citigroup in July 2007 but run as an autonomous unit in South Carolina) and Pimco. Alongside those firms, Citigroup is now also listed as a customer on its website.