Lime Brokerage, a U.S. agency brokerage and low latency technology provider, has laid claim to breaking the microsecond barrier to complete pre-trade checks on customer orders in record time.

The time of a new serivce called LimeDirect: on average less than 250 billionths of a second -- or one millionth of a second.

Lime's recent announcement follows a ban imposed by the U.S. Securities and Exchange Commission on "naked" or unfiltered access to markets. Coined the "market access rule" or Rule 15c3-5, that regulation requires broker-dealers to check out the orders directly sent by their clients to exchanges and other trading venues using their IDs before they are executed. Brokers must establish, document and maintain a system of risk management controls and supervisory procedures to manage the risks associated with giving their clients direct access to trading venues. Those pre-trade controls typically relate to price, trade size, frequency, percentage of portfolio, aggregate intraday costs and potential conflicts of interest.

Lime, owned by Los Angeles-headquartered Wedbush Inc., says it was able to achieve its timetable by using its UL IRIS+ risk management appliance which leverages flating point gate array technology and a messaging protocol called OUCH used in the options markets. In a statement, Lime's managing director of systemic trading David Polen says that LimeDirect offers "near frictionless" trading by allowing clients to control market drivers and the network.

In July 2011 Bank of America Merrill Lynch announced that its BofAML Express trading platform includes pre-trade risk capabilities and can execute orders in less than 10 millionths of a second. Three months later ULink laid claim to lowering the time it took to complete pre-risk trades to less than two millionths of a second.

Written by Chris Kentouris, Editor-in-chief (Chris can be contacted through Chris.Kentouris@hotmail.com)