Latency Arms Race Turns to Pre-Trade Risk

"It is highly correlated with volatility," says Adam Striffler, vice president at Goldman Sachs Electronic Trading, who focuses on risk management in electronic execution. He spoke during a recent industry conference. "In a highly volatile environment, people want to be exposed to more of the marketplace. They want to have more capital committed and be out there a little more. That is something we have to manage carefully."

Electronic trading service providers have to determine whether to limit