FOREX TECHNOLOGY
We are updating connectivity, allowing connections at a more point-to-point basis between the key venues. You are talking about taking out 10s and hundreds of microseconds here,” says Akass.
In December, BT went live with a new basic fibre infrastructure which connected nine key financial centres across the globe, in a move which was specifically targeted at serving the needs of high-speed trading firms.
“Latency on a long distance can make a material difference to FX trading, in a fast moving market where prices are moving rapidly. Te ability to see the pricing and execute quickly will be quite material to your success,” says Akass. “Getting to see that granularity when you are trading in a remote market, clearly that is going to help you. Otherwise you could be out of the money. If you can take 10 miliseconds off trading time, that’s quite a difference.”
Misra emphasises that the 24-hour nature of the FX market makes the development of managed fibre networks with such a global reach particularly important. For example, Equinix has data centres in New Jersey, London and Tokyo, hosting FX platforms which run in parallel, trading varying transaction volume peaks during the day. Having good network connectivity between these venues has become part of the fabric of trading strategies. “FX trading firms are creating a ring between London, New York and Tokyo. New orders will then always hit the fastest route. When the fastest side of the ring breaks, you will be going in reverse around the other side,” explains Misra.
Asia a new frontier
While fierce competition between the major managed fibre network providers has established high-speed connectivity between the major financial hubs, the nascent Asia region remains somewhat of a patchwork of varying standards of connectivity speeds. “I don’t think that the networks in Asia are that well optimized. Tat is a function of geographical differences between individual global financial centers, even in Asia itself,” explains Misra. “Tere are massive flight times between different locations and that is a massive investment. It costs hundreds of millions of dollars to put this stuff in.”
John Panzica
“HFT traders want a straight route. So they will ask the dark fibre guys to run a new fibre route with zero spooled capacity and they will pay extra for it. ”
128 | january 2012 e-FOREX
Akass of BT, says the fibre optic cables linking different markets in Asia are of varying levels of quality, given that many of the early cables were laid down at a low cost for general purposes.
“As the markets have matured, people are putting new fibre cables in. Tere are also political issues which
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