Carrier Hotels: where FX checks in for co-location services >>>
applications in a virtualized, highly scalable environment – can facilitate growth strategies and improve the time- to-market of new products and strategies.
“If they take a space in a shared area all the cabinets will be installed. Often those firms seeking to trade HFT strategies, it is not a massive footprint. It is just a case of putting their trading applications into a shared area, then they are up and running. Tey can also be flexible as far as their growth is concerned,” says Lastennet. “A lot of it is about minimising your capital expenditure and turning cap ex into op ex. So whenever you want to scale, the level of investment is quite limited because we already have all the right equipment in terms of cabinets. Te power is available all the right carriers are there.”
Flexibility and cost
Te flexibility offered by carrier-neutral data centers in providing rapid, high-speed connectivity is of particular benefit to start-ups and small and medium-
sized firms in the FX markets, which do not have the resources to invest in expensive trading connectivity architecture. “Cost, flexibility, and scalability are extremely important [for small and medium-sized HFT firms],” writes Sreekrishna Sankar an analyst at Celent and author of its recent report on high- speed trading infrastructure. “Investing in costlier technologies is a huge risk for firms starting from a small footprint and restricts them from adapting to the market. HFT in FX is a rapidly changing market where strategies need to be adapted to changing market conditions, and hosted solutions provide a suitable alternative.”
Tomas of Savvis points out that the growth in co-location and proximity hosting services offered by managed service providers and carrier-neutral data centres lowers costs of entry to the market for high-speed trading in FX. “As part of the regulatory changes, you might see a lot more HFT operations being spun off from their existing firms or people going it alone and starting their own trading firms. Traders leaving large institutions no longer have access to the expensive trading architecture that they’ve become accustomed to. So with our economies of scale we can provide cost-effective alternatives for high- speed trading in the market,” says Tomas.
Misra highlights the potential cost-savings which carrier-neutral data centres can provide. “Power space in a single cabinet in Equinix’s London data center can be taken out for about €2,000 a month. In contrast, non-neutral data centers such as NYSE Euronext charge between five and ten times more than this, depending on the different services that you are taking into that cabinet,” he says.
Savvis, which has already developed a network of co- location services serving the equities and derivatives markets, is working closely with leading FX platforms to enable them to offer similar services. Customers of the global IT infrastructure company can cross-connect to different trading platforms within 24 hours.
Patrick Lastennet
“A lot of it is about minimising your capital expenditure and turning cap ex into op ex.
So whenever you want to scale, the level of investment is quite limited because we already have all the right equipment in terms of cabinets.”
Savvis hosts Tomson Reuters’ Athena Trading EMS and last year set up an access point to Icap’s EBS FX platform in their Docklands LO4 data centre. Tis enhances the existing connectivity services it offers to HFT firms in its data centres in Weehawken, New Jersey and Slough, where it already offers
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