FOREX TECHNOLOGY
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or pursuing particularly strategies. With FX and other venues now so spread out so globally, it may well mean balancing the options.
Sitting in the middle at an appropriate distance to all venues could well tick the box as opposed to going direct and point-to-point. Ultimately it boils down to a choice, and vendors from both the financial Extranet and high-bandwidth fraternities are vying keenly for business and touting their respective strengths.
Financial Extranets
In terms of performance over consolidated and shared infrastructures, financial Extranets are definitely one way to go in terms of delivering scale performance, cost efficiencies and to enable market participants to have an advantage between certain locations.
Gibbs says: “With a single Extranet architecture users are provided with the ability to access multiple applications and multiple providers of those applications, with a fully managed and secure environment without having to go out and build it themselves.”
Tere are also touted cost savings from this route. According to a recent Yankee Group report (Sept. 2009), c.52% year-on-year TCO (Total Cost of Ownership) savings could be achieved through use of such a managed infrastructure.
Alan Schwartz, President of Transaction Network Services (TNS) - Financial Services, based in New York, commenting on the advantages says: “Today I don’t think you need to sell the virtue of a financial Extranet compared to the 1990s when it was relatively new. What one needs to sell is the reliability and value that a particular vendor’s service offers. So, customers are not being sold necessarily on the technology since they understand the reliability and manageability of the Extranet.”
He adds: “If you choose the right Extranet, this brings high quality, high resiliency and an extremely fast way to access market destinations. And, in view of these markets [FX] proliferating so rapidly out across the globe, the only way to achieve this and financially rein in connectivity costs is to use an Extranet.”
Benchmarking current performance
However, some institutions may wish to build their own bespoke infrastructure and have a trading strategy that involves perhaps two venues with access to a fibre
86 | april 2011 e-FOREX Simon Gibbs
“With a single Extranet architecture users are provided with the ability to access multiple applications and multiple providers of those applications, with a fully managed and secure environment without having to go out and build it themselves.”
optic route that they then light themselves. In essence this decision will be a trade-off and relative to what strategies a particular firm has and in what ways it will enable them to generate a return on their investment. What is also important is obtaining metrics on current system and network performance.
Mark Cooper, Head of Business Development for Financial Markets, Exponential-e, a network and ICT solutions provider, commenting on how FX market participants can benchmark the performance of their existing communication and trade connectivity infrastructures, says there are effectively a “number of ways” it can be achieved. But buyer beware.
He says: “It all depends on what their provider is giving them in terms of reporting, what tools they’re using within their own side of the network - outside
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