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How does NSE-mandated encryption impact your latency?

There is an increased concern about security in online environments in the world right now, and the financial markets are no exception. To name just a few examples, the recent STAC Summits in New York, Chicago, and London all had a panel discussion titled "Encrypting our markets: The impact of security on high-performance infrastructures.” Eurex now enforces encryption for all connections outside the non-public data center facility. But the biggest change is scheduled at the National Stock Exchange of India (NSE).

Encrypting and decrypting the outgoing and incoming data takes precious nanoseconds.

Starting from January 2024, NSE is planning to only allow encrypted NNF connections to the exchange for all participants, even from the colocation. The chosen algorithm is AES with 256-bit keys in GCM mode.

This is great news for addressing security concerns, but not so great news for some of the market participants. Brokers relying on monitoring the order flow of their clients to calculate risk exposure in real-time will have a much harder time doing so with encrypted traffic. Internal systems for logging data need to be reworked, or at least add storing of the cryptography keys to allow decryption of the captured data. The CPU utilization of all systems will increase.

All of our clients are, of course, concerned about the impact on their latency. Encrypting and decrypting the outgoing and incoming data takes precious nanoseconds. Encryption also significantly complicates the process of preloading orders or whole packet payloads, which are to be sent out later with ultra-low latency triggered by a specific event. That’s because the cipher changes with each transmitted block for security reasons.

How can Magmio help?

We have spent the past couple of months optimizing our AES implementation. The performance results of our encryption IP core are, according to the early adopters, quite impressive. There is also no need to make changes to the preloading and precomputing of future orders and payloads.

If you’re intrigued, do not hesitate to contact us so you can be ready for the January enforcement of encryption on NSE.

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