High-Frequency Trading Server Market Size, Share & Trends Analysis Report By Processor (X-86-based, ARM-based, Non-X86 based), By Form Factor, By Application (Equity Trading, Forex Markets, Commodity Markets), By Region, And Segment Forecasts, 2023 - 2030

Market Size & Trends

The global high-frequency trading server market size was valued at USD 575.3 million in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 6.2% from 2023 to 2030. The need for Ultra-Low Latency (ULL) in the trading ecosystem and the advancements in quantum computing in financial services are expected to drive 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 of such high-speed executions is high-power computational analysis, which outperforms conventional stock trading servers.

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 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) and 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, trading firms have located their data centers closer to the stock exchanges to provide faster feeds for trading applications. Proximity to a stock exchange gives trading firms the advantage of gaining high bandwidth networks with low latency connections with better results, thereby creating product demand.

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

Processor Insights

The x-86 segment accounted for the largest revenue share of over 69.2% in 2022. 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.

Moreover, the ARM-based processor segment is anticipated to register the fastest CAGR of 8.4% 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 less than X86 chips, favoring segment growth.

Application Insights

In terms of revenue, the equity trading segment accounted for the largest market share of over 38.5% in 2022. 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.

The Forex market segment is anticipated to grow at the fastest CAGR of 7.4% over the forecast period. 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.

Form Factor Insights

The 2U segment accounted for the highest revenue share of over 38.5% in 2022 and will expand at the fastest CAGR from 2023 to 2030. 2U form factor allows SMEs to scale up IT infrastructure at a lower cost. The 2U form factor also offers greater flexibility in a singular chassis, which enables high-speed transactions on several computer systems. Furthermore, 2U servers offer high computing with a smaller footprint, executing high-performance workloads like high-frequency trading computing applications.

1U is the highest-growing form factor expected to grow at the fastest CAGR of 7.4% in the high-frequency trading server market due to its ability to provide high-density computing, low latency, cost-efficiency, and scalability. The compact size allows more computing power in a smaller space while collocating in data centers reduces latency. Additionally, 1U servers offer cost savings regarding power consumption and rack space utilization.

The 4U segment is anticipated to grow at a significant 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 must also improve due to low storage capability and high power consumption.

Regional Insights

North America accounted for the largest revenue share of over 41.0% in 2022. The early technology adoption and penetration of trading platforms in the region contributed to regional market growth. In addition, the presence of leading vendors, such as HP Inc., Dell Technologies, and Hypertec, providing 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 region capturing a CAGR of 8.6% over the forecast period. Initiatives undertaken by the Chinese government to promote automated trading in financial markets contributed to 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 market growth.

Key Companies & Market Share Insights

Market participants focus on combining organic and inorganic growth approaches to sustain competition. Industry players are involved in strategies such as partnerships, business expansions, new product developments, and contracts to expand their market share. 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.

Recent Developments

• In April 2023, Orthogone Technologies and Napatech announced a strategic partnership to develop a cutting-edge SmartNIC platform for high-frequency trading (HFT) applications. This collaboration caters to financial technology enterprises that require HFT applications capable of processing large volumes of transaction data with high throughput and ultra-low latency. By combining Orthogone's development environment and IP cores with Napatech's programmable SmartNIC, developers can create HFT applications with exceptional ultra-low latency performance. The partnership aims to deliver a state-of-the-art solution to meet the demanding requirements of the HFT industry.

• In May 2021, Toshiba Corporation and Dharma Capital K.K. announced a collaborative project to assess the efficacy of high-frequency trading (HFT) strategies for Japanese listed stocks. The project leverages Toshiba's Simulated Bifurcation Machine, a quasi-quantum computer, to explore optimal solutions. This groundbreaking initiative marks the world's first endeavor to evaluate the practical application of quasi-quantum computers in HFT strategies within real financial trading systems.

• In June 2020, Hypershark conducted a product presentation meeting where they invited various Taiwanese stock and futures companies. The purpose of the meeting was to formally introduce the "Overclocking Server RACE-K/RACE-Xe" and Taiwan's pioneering FPGA quotation system called "Hyper-Q." These innovative solutions are designed to offer ultra-low latency solutions for the financial industry. The newly launched series of RACE-K and RACE-Xe servers provide customers with a range of options to choose from.

High-Frequency Trading Server Market Report Scope

Global High-Frequency Trading Server Market Report Segmentation

This report forecasts global, regional, and country revenue growth and analyzes the latest industry trends in each sub-segments from 2017 to 2030. For 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 (Revenue in USD Million, 2017 - 2030)

  • X-86 Based

  • ARM-Based

  • Non-X86 based

• Form Factor Outlook (Revenue in USD Million, 2017 - 2030)

  • 1U

  • 2U

  • 4U

  • Others

• Application Outlook (Revenue in USD Million, 2017 - 2030)

  • Equity Trading

  • Forex Markets

  • Commodity Markets

  • Others

• Regional Outlook (Revenue in USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia

    • South Korea

  • Latin America

    • Brazil

    • Mexico

  • Middle East and Africa

    • United Arab Emirates

    • Saudi Arabia

    • South Africa