{
  "id": 19763037,
  "title": "Why High-Frequency Trading (HFT) Firms Still Rely on Bare Metal Over Cloud Servers",
  "url": "https://urgent.news/2026/11/13/why-high-frequency-trading-hft-firms-still-rely-on-bare-metal-over",
  "topic": "tech",
  "section": "Tech",
  "published": "2026-11-13T05:43:11.000Z",
  "source": {
    "name": "Dev.to",
    "slug": "dev-to",
    "url": "https://dev.to/bytesrack/why-high-frequency-trading-hft-firms-still-rely-on-bare-metal-over-cloud-servers-11je"
  },
  "original_language": "en",
  "account": "In the world of High-Frequency Trading (HFT), a single millisecond delay can mean the difference between a profitable trade and a costly loss. While many companies, including streaming platforms, social networks, and retail banks, have turned to cloud services like AWS, Azure, and Google Cloud, the HFT sector continues to stick with physical hardware solutions, specifically bare metal servers. There are several key reasons why these well-funded quantitative firms resist the allure of infinite cloud scalability.\n\nFirstly, HFT firms rely on bare metal servers to eliminate the jitter caused by hypervisors in cloud environments. Hypervisors divide physical servers among multiple virtual instances, adding overhead and unpredictable network response time spikes. By using bare metal servers, trading algorithms interact directly with physical CPUs and network interface cards (NICs), ensuring consistently flat and sub-microsecond latency. This predictability in execution is crucial for active trading strategies that must capitalize on fleeting market inefficiencies.\n\nSecondly, co-location plays a vital role in HFT infrastructure. By leasing physical space within or near the stock exchange's primary data center, firms can minimize latency caused by the light travel time through fiber-optic cables. Public cloud regions, while optimized for power efficiency and physical space, are geographically distant from financial matching engines. For latency-arbitrage strategies, this geographical distance makes cloud infrastructure non-viable.\n\nThirdly, bare metal servers offer a 100% dedicated environment free from resource contention. In public clouds, multi-tenant architectures can result in a \"noisy neighbor\" problem, where neighboring virtual machines compete for shared resources like memory bandwidth, CPU cache, and network capacity. Even slight delays caused by another tenant during high market volatility can be detrimental to an active trading algorithm. Bare metal servers provide completely static and predictable resource availability, ensuring consistent performance.\n\nLastly, HFT firms have the freedom to tailor their hardware to their specific needs. They deploy FPGAs (Field Programmable Gate Arrays) for tasks like parsing market data and generating orders at the silicon level. This level of customization is restricted in public cloud environments, where standardized offerings often come with locked firmware settings. By maintaining control over their hardware, trading firms can optimize their stack to the utmost detail.\n\nWhile bare metal servers remain the go-to solution for latency-critical HFT operations, the sector has found a balance by leveraging cloud technology for non-critical workloads. Asynchronous processes, such as backtesting trading strategies, running historical risk analytics, and storing large amounts of market data, can be performed in the cloud where speed is not a primary concern. The cloud offers unmatched global scalability and flexible cost control, making it an excellent choice for tasks that don't demand sub-microsecond execution.\n\nIn essence, high-frequency trading firms require zero virtualization overhead, physical proximity to the exchange, entirely dedicated processing resources, and silicon-level hardware customization. Until cloud platforms can overcome the limitations of virtualization and physics, bare metal servers will continue to be the standard for latency-critical market operations.",
  "summary": "In High-Frequency Trading (HFT), speed is the actual product. A single millisecond delay dictates whether a strategy captures a profit or absorbs a loss. While streaming platforms, social networks, and retail banks have migrated heavily to AWS, Azure, and Google Cloud, the HFT sector stubbornly anchors its execution systems to physical hardware. They rely on bare metal . Understanding why…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}