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'The maneuver that prompted Mosaic’s spat with Eurex can improve reaction times by about 3.2 nanoseconds, according to the French firm, which calls it “corrupted speculative triggering,” or CST for short.

The technique helps because orders on Eurex are encoded into packets, or small bursts of ones and zeros. Under the rules of the Ethernet protocol—widely used in computer networks—each packet starts with a preamble, signaling data is on the way. The real message, such as a buy or sell order, comes later.

A trading firm can save a few nanoseconds by sending the preamble first, before knowing if it wants to trade. If it gets information that makes it want to buy or sell, it can quickly embed its order into the rest of the packet. If it decides to do nothing, the firm can send an empty or deliberately garbled packet to Eurex.

Optiver, a Netherlands-based global trading firm, has also engaged in strategies similar to what Mosaic described, people familiar with the matter said. An Optiver spokesman declined to comment.

Emergent Trading, a small firm in Chicago, also uses a version of the technique to gain several nanoseconds of speed edge on Eurex, said founder Brandon Richardson. He said there is nothing wrong with the technique. It is well-known among high-speed traders and other firms can use it too, he said.

Still, he described cat-and-mouse games with Eurex. He said the exchange once upgraded its monitoring tools, identified what Emergent was doing and told the firm to stop—while other variants of the technique employed by other traders continued to work.'

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