Latency Floors

In the design of modern electronic marketplaces, fairness is paramount, especially for takers, the participants who consume liquidity. The challenge is to ensure that these takers compete on equal terms, without anyone gaining an unfair advantage through superior technology or privileged access. Market-makers, by contrast, play a different but equally vital role: they add liquidity, maintain the “track,” and keep the market vibrant and competitive.

Nekuti’s deterministic latency floor is engineered to guarantee fairness for takers, while providing market-makers with the tools needed to support continuous, responsive liquidity.

The Marathon Analogy: The Takers’ Race

Consider a marathon where only the runners, takers, are competing for the prize. To ensure fairness, all runners start together, follow the same route, and cross the same finish line. No runner can jump the gun or cut corners.

In Nekuti’s matching engine, taker orders are gathered into batches and processed together at regular intervals. This means no taker can gain even a microsecond advantage; every participant receives the same fair opportunity for execution.

Market-Makers: The Pace-Setters and Track Maintainers

Market-makers are not participants in the race itself; rather, they make the race possible. By providing liquidity, market-makers ensure that the market remains deep and resilient.

Genuine, non-crossing maker orders are processed immediately, without being included in the batching process.

This approach keeps the order book fresh and responsive, supporting tighter spreads and enabling more dynamic quoting. When a market-maker needs to adjust or cancel a quote, their cancellation requests are given priority, allowing them to manage risk efficiently and respond swiftly to sudden market movements.

Four Core Features: Ensuring a Fair Race for Takers

Nekuti’s latency floor includes of four integrated features, whose use is recommended to enhance fairness for takers and operational efficiency for makers:

Order Window (Batch Period) for Takers: All taker orders are collected into a batch and processed together at fixed intervals. This is the starting gun for the race, ensuring that no taker can gain an advantage by being a fraction of a second faster.
Immediate Maker Processing: Maker orders that add liquidity are processed instantly, outside the takers’ race. This keeps the market liquid and responsive, and ensures that makers can always provide up-to-date quotes.
Prioritization of Cancels: Cancellation requests, especially from market-makers, are given precedence. This allows liquidity providers to manage their risk and adjust their positions swiftly, supporting a more stable and confident market.
Randomized Batch Execution for Takers: Within each batch, taker orders are executed in a randomized sequence at the account level. This prevents any single taker from consistently getting the best execution simply by being fastest on the wire, and ensures that the race remains fair for all takers.

Deterministic Processing: Separate Lanes for Makers and Takers

Nekuti’s architecture distinctly separates the processing of maker and taker orders.

Maker orders which provide liquidity, are handled immediately and independently, ensuring that liquidity provision is never interrupted. Taker orders, which consume liquidity, are grouped and executed strictly according to the deterministic schedule.

This separation guarantees fairness, transparency, and reliability for takers, while maintaining high operational efficiency for makers.

The Benefits: Fairness for Takers, Strength for the Market

By enforcing these rules, Nekuti’s deterministic latency floor delivers a host of benefits:

Inclusivity for All Participants: The approach enables smaller takers, those without access to ultra-fast infrastructure, to compete effectively. This diversity strengthens the market and encourages innovation.
Fairness and Transparency for Takers: Takers compete on a level playing field, with no speed advantage for those with better infrastructure. Every taker knows the rules and can trust the outcome.
Risk Mitigation for Liquidity Providers: By allowing quick cancellations and neutralizing predatory speed-based tactics, the system protects market-makers from adverse selection and toxic order flow, making participation safer and more attractive.
Market Quality and Liquidity from Makers: Immediate processing for makers encourages continuous liquidity, while prioritizing cancels lets market-makers manage risk and quote tighter spreads. The result is a deeper, more reliable order book.
Regulatory Confidence: The transparency and auditability of the system make compliance straightforward and support the evolving standards for market fairness and operational integrity.

Conclusion: A New Standard for Fairness—For Takers and Makers Alike

Nekuti’s deterministic latency floor is not just a technical innovation, but a blueprint for a fairer, more resilient marketplace. By combining strict determinism, scheduled batching for takers, and immediate processing for makers, the platform ensures that every taker can compete on equal terms, and every maker can provide liquidity with confidence. Like a well-run marathon, the matching engine ensures that the race is fair for those running it, the track is well maintained, and the best competitors rise to the top through skill and strategy, not just speed.

For builders, traders, and market operators, this is the future of derivatives trading, a market where integrity, transparency, and genuine technical achievement drive sustainable growth.