---
title: "Low Latency Stock Exchange"
description: "Explore the architecture of a low-latency stock exchange system."
image: "https://assets.bytebytego.com/diagrams/0265-low-latency-stock-exchange.jpg"
createdAt: "2024-02-26"
draft: false
categories:
  - caching-performance
tags:
  - "Low Latency"
  - "Stock Exchange"
---

![](https://assets.bytebytego.com/diagrams/0265-low-latency-stock-exchange.jpg)

How does a modern stock exchange achieve **microsecond latency**? The principal is:

**Do less on the critical path**

*   Fewer tasks on the critical path

*   Less time on each task

*   Fewer network hops

*   Less disk usage

For the stock exchange, the critical path is:

*   **start**: an order comes into the order manager

*   mandatory risk checks

*   the order gets matched and the execution is sent back

*   **end**: the execution comes out of the order manager

Other non-critical tasks should be removed from the critical path.

We put together a design as shown in the diagram:

*   deploy all the components in a single giant server (no containers)

*   use shared memory as an event bus to communicate among the components, no hard disk

*   key components like Order Manager and Matching Engine are single-threaded on the critical path, and each pinned to a CPU so that there is **no context switch** and **no locks**

*   the single-threaded application loop executes tasks one by one in sequence

*   other components listen on the event bus and react accordingly