A company is designing a network for a real-time trading application that requires extremely low latency (sub-millisecond) between two EC2 instances located in the same AWS region. The instances are in different Availability Zones. The trading application uses a proprietary protocol over TCP. The company wants to minimize latency as much as possible. They are considering using a placement group. Which type of placement group should they use, and what network optimization should they apply?
Cluster placement group provides low latency; enhanced networking reduces overhead.
Why this answer
A cluster placement group is the only placement group type that provides low-latency, high-bandwidth network performance by placing instances in a single Availability Zone within the same rack. Enhanced networking using SR-IOV (Single Root I/O Virtualization) bypasses the hypervisor's network stack, reducing per-packet processing latency and jitter, which is critical for sub-millisecond trading traffic over TCP.
Exam trap
AWS often tests the misconception that a cluster placement group can span multiple Availability Zones, but in reality, it is confined to a single AZ to guarantee low-latency physical proximity.
How to eliminate wrong answers
Option A is wrong because spread placement groups spread instances across distinct hardware to reduce failure risk, which increases network distance and latency, and dedicated tenancy does not improve network performance. Option B is wrong because partition placement groups isolate instances across logical partitions for large distributed workloads, not for low latency, and EBS-optimized instances improve storage throughput, not network latency. Option D is wrong because a cluster placement group requires all instances to be in the same Availability Zone to achieve low latency; placing instances in different Availability Zones negates the benefit and introduces cross-AZ latency.