NYSE Euronext’s Future: The Data Center
November 24th, 2009 By: Rich Miller
NYSE Euronext says it has already pre-sold more than 20,000 square feet of colocation space in its new data center in northern New Jersey, reflecting strong interest in the exchange’s expansion into the data center services arena. The new facility, which opens next year, is the engine driving NYSE Euronext’s transformation into a technology platform for high-speed trading.
“We really see our data centers as the future of our market,” said Stanley Young, CEO of NYSE Technologies and co-global CIO of NYSE Euronext (NYX). “To show how vital this is, we have pre-sold space in that data center a year before our matching engines come online.”
Young discussed the NYSE’s new data centers and the role they play in its business during a panel as it hosted a recent energy efficiency summit with The Green Grid. Young said the 400,000 square foot data center in Mahwah will include 170,000 square feet of raised-floor data center space.
Large Footprint for Colocation
But NYSE Euronext will require just 20 percent of that space for its own infrastructure, Young said. The rest will be available for lease to trading firms seeking high-speed access to the servers – known as “matching engines” – that execute electronic trades.
In the increasingly data-driven environment on Wall Street, access to those servers has enormous value. “For our data center space I can get a multiple of three times what normal data center vendors can get for that space due to the proximity to the matching engines,” said Young. “You can see how valuable that real estate becomes.”
The Data Center as ‘Virtual Marketplace’
That has changed NYSE Euronext’s approach to its business. “We think of our data centers as the exchanges used to think of our trading floors years ago,” said Young. “What we’re seeing with our data centers is that we’re creating that virtual marketplace.
“We’ve actually changed our model,” he continued. “We’re moving from being a place where transactions occur to being what we call a fabric player. We allow industry participants to meet virtually and we get paid for that. That model is now driving all of our thinking.”
This evolution follows decades of market changes that have altered the primacy of the NYSE’s trading floor, once the iconic image of stock trading in the U.S. The emergence of computer-driven trading venues like the NASDAQ market has created a more diverse and competitive trading ecosystem.
Building A Platform Through Acquisitions
These forces have shaped NYSE Euronext’s adoption of technology to extend its reach as the rise of electronic trading shifted a growing percentage of financial trades to loe-latency platforms. In early 2006 the NYSE acquired electronic trading platform Archipelago Holdings to become a public company, and then expanded globally with a deal to buy EuroNext in 2007.
The NYSE built its technology warchest with acquisitions of trading platform management specialists TransactTools (2006) and Wombat Financial (2008). It is currently in the process of consolidating these tools into a single Universal Trading Platform for the exchange and its partners.
NYSE Euronext sees this infrastructure – including the data center, network fabric and trading platform -as its competitive edge in the new Wall Street.
“In our business model we get paid by the transaction,” Young said. “(The number of) trades executed is a big revenue driver. If our market share is under pressure, being able to extend our platform becomes an important part of replacing our revenue from lost transactions.”
The Primacy of Power
As the activity shifts from the exchange post to the matching engine, those transactions are viewed in terms that matter most in the data center – the amount of power consumed.
“Our real business is power consumption and capacity of compute,” said Young. “That is our bread and butter. We sell space in our data centers by the kilowatt. We meter people’s cabinets. The more (trading) they do in those cabinets and the hotter they run, the more we earn. The cost of power is getting down to where people are making trading decisions based on it.”
That trend drove NYSE Euronext’s decision to get into the data center business, building its own facilities in northern New Jersey and London to anchor a next-generation trading operation. “We were running out of power, and had to look at our data centers, our trading floors for the future,” said Young. “We had to make some strategic decisions to build new data centers. It was critically important.”
Building From Scratch
At the time, NYSE Euronext operated out of data centers it leased from third parties. “When we looked around, there was nothing available that met the needs of our markets and business at all, so we decided to build from scratch,” said Young. “That gave us the opportunity to look at every single piece of green technology that was available in order to build these data centers as efficiently as we could.”
Young says billions of transactions every day will flow through the New Jersey facility, known internally as a “liquidity hub” rather than a data center. “You can understand why we build these data centers to 2N+1,” he said. “Everything is double backed up, at least.”
The facility will be able to support power densities of up to 14 kilowatts per cabinet. The company is using a modular design so it can deploy new space as needed.
The NYSE is focused on managing its power, but some popular efficiency measures are non-starters for the NYSE, including virtualization. “We can’t virtualize our trading engines because they’re running full blast all the time,” said Young. “What we’re starting to look into is putting shared memory access onto a matching engine.”
Looking at RDMA as Accelerator
NYSE has also worked with Cisco Systems on an Ethernet-based trading solution using Remote Direct Memory Access (RDMA) accelerators to reduce latency between compute nodes. RDMA allows data to move directly from the memory of one computer into that of another without involving either one’s operating system. Young says this technology could result in latency of 10 to 15 microseconds when used over 100 gigabit Ethernet connections.
“Our world is a world where microseconds count,” said Young. “My users measure my abilty to serve them in tens of microseconds, and if they had the technology they would get down to nanoseconds.”
[...] orders. To recapture the trading revenue, NYSE is finishing construction on a 400,000-square-foot data center in Mahwah, New Jersey that will be capable of handling a million messages a second, and every trade [...]
JJPosted September 18th, 2010
NYSE precedent in strategic importance of colo.