Wall Street Still Expanding in Low Latency Trading
November 11th, 2008 By: Rich Miller
Despite the credit crunch and stock market meltdown, Wall Street continues to invest in mission-critical IT infrastructure, especially data center space to support low latency trading. Two leading providers of advanced trading systems, Dow Jones and RTS Realtime Systems, said today that they have added infrastructure in data centers operated by Equinix Inc. (EQIX).
RTS Realtime Systems said it has expended its operations at two Equinix facilities, the Chicago-3 data center in Elk Grove Village, Ill. and the New York-4 site in Secaucus, New Jersey. RTS offers high-speed low latency market access to more than 40 global equities, options and futures markets via its network of data centers in the U.S., Europe and Asia.
Dow Jones & Co. said it has deployed infrastructure in the Equinix Chicago-1 data center to extend the reach of its algorithmic trading products to its customers via the low latency financial ecosystem in Equinix Chicago data hubs.
“Making our news feed available from Equinix’s Chicago center significantly extends the Dow Jones footprint while giving our customers the highest available speed and performance with key exchanges and sources of U.S. and international data,” said Joe Lanza, vice president, managing director for algorithmic and trading solutions at Dow Jones Enterprise Media Group. “The faster our customers can get the information they need and execute trades on it, the more likely they can take advantage of market opportunities.”
“Speed is paramount in today’s financial markets,” said Steve Smith, president and CEO of Equinix. “By operating at Equinix, Dow Jones can provide its customers with critical news and information services with the lowest possible latency, providing them with a competitive advantage in developing their trading strategies.”
That competitive advantage is clearly something traders will continue to pay for in even the toughest times on Wall Street.
Proximity Hosting Can Only Take you Half Way There
Zero latency is the optimal trading speed that all firms hope to achieve at some point. But until that can become a reality, there is a race to keep reducing latency from all aspects of the trading process. From the server to the messaging to the sending and receiving of data, each piece must be optimized to reach the goal of zero latency. There are many avenues companies are looking to reduce variables and risk to latency – one of those is proximity hosting.
There are data centers where the trader can actually collocate with the exchanges. For example, in Weehawken, NJ there is a data center that houses five major exchanges including: the American Stock Exchange, Philadelphia Stock Exchange, and BATS Trading. This is a way to ensure there is almost zero latency built into the trade to those exchanges. But it is not the complete puzzle. Even with proximity hosting to collocate within a data center that houses exchanges there are still external servers that play a role in the execution of the trade. These are the data feeds, the platforms and the messaging. Even the data centers that host the exchange as just a cross connect, rarely are they the only exchange a firm is trading on. So how do you close the gap?
The idea of Central Proximity hosting is to find locations that are center to most of the locations you need to access. There are many hosting locations within the NJ/NY trading area: Clifton, North Bergen, and Weehawken, NJ just to name a few that provide central proximity hosting. Central Proximity Hosting is getting within a few miles of all the locations a trade needs to execute. So that makes up half of the picture – how do you complete the race to speed of light transport?
The network provider does the rest. A Carrier is a good solution for the transport of data when latency and performance are important but not critical. When latency reaches the level of critical you need a more agnostic approach to finding the best network. In working with each Carrier, they will provide you their “on net” best solutions between locations. That is not always the best solution for your specific needs. This is where a network integrator comes into play.
The network provider that you partner with must be able to provide the lowest latency solutions for the metro ring and the longhaul. The network integrator you work with should be Carrier Agnostic, to ensure you are getting the optimal solution for your needs and not a solution based on the relationship an integrator has with a Carrier. Some integrators, like CFN Services, can even go a step further. They not only can make recommendations as to the optimal solutions for your needs, but they can create new routes specific to your priorities. An integrator like CFN Services can actually utilize optimal spans of available fiber to create new fiber routes that do not exist along any single Carrier.
In the race to Alpha, the combination of Central Proximity Hosting coupled with the Low Latency Transport is key to your success.