High-frequency Trading Server Market Size, Share & Trends Report

High-frequency Trading Server Market Size, Share & Trends Analysis Report By Processor (X-86-based, ARM-based), By Form Factor (2U, 4U), By Application (Equity Trading, Forex Markets), And Segment Forecasts, 2021 - 2028

  • Published Date: Apr, 2021
  • Base Year for Estimate: 2020
  • Report ID: GVR-4-68039-410-4
  • Format: Electronic (PDF)
  • Historical Data: 2017 - 2019
  • Number of Pages: 101

Report Overview

The global high-frequency trading server market size was valued at USD 387.9 million in 2020 and is expected to register a compound annual growth rate (CAGR) of 3.5% from 2021 to 2028. The need for Ultra-Low Latency (ULL) in the trading ecosystem and the advancements in quantum computing in financial services are expected to drive the market growth over the forecast period. Furthermore, a surge in the need for intent-based networking conducive to a high-frequency trading environment is expected to create opportunities for future growth. High-frequency trading (HFT) servers are based on mathematical algorithms and facilitate high-speed trading transactions in less than nanoseconds. One of the significant traits for such high-speed executions is high power computational analysis, which outperforms conventional stock trading servers.

Asia Pacific HFT servers market size, by form factor, 2017 - 2028 (USD Million)

In recent years, market participants have focused on increasing their investments to develop sophisticated technologies to reduce network latency. For instance, in 2019, Ciara, a brand of Hypertec, launched three low-latency servers, namely ORION HF210-G5, ORION HF610T-G4, and ORION HF310-G4, notably built for high-frequency transactions and reducing trading delays. Such types of servers are further responsible for garnering multi-billion profits for trading firms, creating opportunities for server Original Design Manufacturers (ODMs).

An HFT server is a subset of high-performance computing applications and implements Artificial Intelligence (AI) as well as deep learning capabilities. These servers allow traders to predict stock market trends and conduct trade in milliseconds. The demand for HFT applications is increasing in large investment banks and firms offering hedge funds, subsequently creating growth opportunities in the industry.

A high-frequency trading environment requires an ultra-low latency feed that helps manage multiple orders to perform rapid data analysis and correlation. Therefore, to provide faster feeds for trading applications, trading firms have located their data centers closer to the stock exchanges. Proximity to a stock exchange gives trading firms the advantage to gain high bandwidth networks with low latency connections with better results, thereby creating product demand.

Over the next few years, algorithmic-based trading in equity markets is likely to gain traction. Algo-based trading helps equity traders in implementing and modifying stop-loss strategies. Since stock markets are volatile as well as unpredictable it becomes challenging to manage large portfolios. Thus, integrating stop-loss strategies with HFT systems is expected to help trading firms in managing risks and preventing losses, further creating opportunities for servers supporting these applications.

Processor Insights

The x-86 segment accounted for the largest revenue share of over 80% in 2020. The segment growth can be attributed to the large-scale adoption of x-86 core processors and industry dependency on software code based on the x-86 architecture. In addition, x86 processors are compatible with high-computing applications, such as data analytics workloads and AI that perform computing executions at a faster rate. These product attributes allow financial service providers to perform trading transactions at low latency.

The ARM-based processor segment is anticipated to register the fastest CAGR over the forecast period. The segment growth can be attributed to the increased adoption of cloud-based migration tools that help vendors port server applications on ARM architecture. Furthermore, ARM-based servers cost comparatively less than X86 chips, thereby favoring the segment growth.

Form Factor Insights

The 2U segment accounted for the highest revenue share of over 42% in 2020 and will expand further at the fastest CAGR from 2021 to 2028 2U form factor allows SMEs to scale up IT infrastructure at a lower cost. The 2U form factor also offers greater flexibility in singular chassis, which enables high-speed transaction on several computer systems. Furthermore, 2U servers offer high computing with a smaller footprint, thereby executing high-performance workloads, such as high-frequency trading computing applications.

The 4U servers segment is anticipated to register the second-highest CAGR over the forecast period. This growth can be attributed to the increased adoption of virtualized data centers. In addition, considering their technical specification, 4U servers provide improved scalability with up to eight full-height and full-length PCI Express slots. However, these servers also pose challenges due to low storage capability and high power consumption.

Application Insights

In terms of revenue, the equity trading segment accounted for the largest market share of over 41% in 2020. The segment growth can be attributed to the high penetration of HFT trading platforms, particularly in large-cap equity markets. Based on application, the market has been categorized into equity trading, foreign exchange, commodity markets, and others.

Global HFT servers market share, by application, 2020 (%)

Foreign Exchange (FOREX) market is anticipated to emerge as the fastest-growing segment from 2021 to 2028. The success of equity trading has influenced the adoption of HFT in forex markets, creating avenues for growth. Traders in these markets aim to improve their profitability by deploying low-latency servers in stock exchanges to execute trading. HFT servers with low-latency features allow forex traders to process large volumes of data and facilitate high-speed transactions.

Regional Insights

North America accounted for the largest revenue share of over 40% in 2020. The early technology adoption and penetration of trading platforms in the region contributed to the regional market growth. In addition, the presence of leading vendors, such as HP Inc., Dell Technologies, and Hypertec, providing necessary technical assistance for financial companies to deploy after-sales services is also one of the factors contributing to the regional market growth. Increased adoption of algo-based trading in secondary markets for high-speed trading execution is expected to drive the demand for HFT servers over the forecast period.

Asia Pacific is expected to be the fastest-growing regional market over the forecast period. Initiatives undertaken by the Chinese government to promote automated trading in financial markets contributed to the market growth and this trend is expected to continue over the next few years. Developed economies, such as Japan and Australia, are anticipated to experience gradual growth over the forecast period, which can be attributed to the early adoption of HFT systems. However, the lack of proper IT infrastructure and technical skillset may limit the market growth.

Key Companies & Market Share Insights

The market is highly consolidated with a limited number of players possessing strong distribution networks worldwide. Market participants focus on a combination of organic and inorganic growth approaches to sustain competition. For instance, in 2020, Cisco Systems, Inc. acquired Exablaze, an Australian manufacturer of advanced network devices. The acquisition helped Exablaze to strengthen its product portfolio in next-generation technologies, such as HFT.

The companies are also focused on innovation to keep pace with constantly evolving technology and stay ahead of the competition. For instance, in 2019, International Computer Concepts (ICC) launched Vega R-119i, an overclocked financial server that helped financial companies achieve low latency for high-frequency trading and other financial service applications. Some prominent players in the global High-Frequency Trading (HFT) server market include:

  • ASA Computers, Inc.

  • Blackcore Technologies

  • Hypertec

  • Dell

  • HP enterprise Development LP

  • Hypershark Technologies

  • Lenovo

  • Penguin Computing

  • Super Micro Computer, Inc.

  • Tyrone Systems

  • XENON Systems Pty Ltd.

High-frequency Trading Server Market Report Scope

Report Attribute

Details

Market size value in 2021

USD 394.0 million

Revenue forecast in 2028

USD 501.0 million

Growth rate

CAGR of 3.5% from 2021 to 2028

Base year for estimation

2020

Historical Data

2017 - 2019

Forecast period

2021 - 2028

Quantitative units

Revenue in USD million, volume in units, and CAGR from 2021 to 2028

Report coverage

Revenue forecast, volume forecast, company share, competitive landscape, growth factors, and trends

Segments covered

Processor, form factor, application, region

Regional scope

North America; Europe; Asia Pacific; Latin America; MEA

Country scope

U.S.; Canada; U.K.; Germany; France; The Netherlands; China; India; Japan; Australia; Brazil; Mexico

Key Companies Profiled

ASA Computers, Inc.; Blackcore Technologies; Business Systems International Ltd.; CIARA; Dell; HP Enterprise Development LP; Hypershark Technologies; Lenovo; Penguin Computing; Super Micro; Tyrone Systems; XENON Systems Pty Ltd.

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Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2028. For the purpose of this study, Grand View Research has segmented the global high-frequency trading server market report based on processor, form factor, application, and region:

  • Processor Outlook (Volume, Units; Revenue, USD Million, 2017 - 2028)

    • X-86-based

    • ARM-based

    • Non-x86-based (MIPS, Imagination)

  • Form Factor Outlook (Volume, Units; Revenue, USD Million, 2017 - 2028)

    • 1U

    • 2U

    • 4U

    • Others (3U, 5U, 6U, 7U)

  • Application Outlook (Volume, Units; Revenue, USD Million, 2017 - 2028)

    • Equity Trading

    • Forex Markets

    • Commodity Markets

    • Others (Bonds and Other Derivatives)

  • Regional Outlook (Volume, Units; Revenue, USD Million, 2017 - 2028)

    • North America

      • U.S.

      • Canada

    • Europe

      • U.K.

      • Germany

      • France

      • The Netherlands

      • Rest of Europe

    • Asia Pacific

      • China

      • India

      • Japan

      • Australia

      • Rest of Asia Pacific

    • Latin America

      • Brazil

      • Mexico

      • Rest of Latin America

    • Middle East & Africa

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