Swedish regulators are investigating whether NASDAQ OMX sought to exclude competing exchanges from key trading hubs following a dispute over access to a key Verizon Business data center near Stockholm, the Financial Times reports. The investigation highlights the growing regulatory focus on data centers, which house electronic trading hubs that comprise a growing share of volume on global financial markets.
NASDAQ OMX has confirmed that its Stockholm premises had been visited by regulators and said it is cooperating with the inquiry. It apparently is not the only company that has been contacted.
“The Swedish Competition Authority can confirm that it had cause to make unannounced visits to companies in the financial sector,” the regulator said in a statement. “These visits comprise a step in the search for evidence that may support suspicions of possible anti-competitive cooperation or abuse of dominant position.”
The case stems from an incident last fall in which trading group Burgundy complained to the Swedish Competition Authority, saying it was refused access to a Verizon colocation center in Lunda, Sweden used by Nasdaq OMX and many Swedish banks and brokers.
Burgundy and its technology provider Cinnober said Verizon Business reneged on an agreement for Cinnober to move Burgundy’s matching engines to the Lunda data center (see coverage at Low-Latency.com and Waters Technology). As a multiateral trading facility (MTF), Burgundy is a rival to the NASDAQ OMX exchanges in the Nordic countries. Burgundy wound up moving its matching engines to an Interxion data center about five miles away.
Verizon Business has not offered public comment on the complaint. But Olof Neiglick, the chief executive of Burgundy, says his complaint has relevance for other markets where data centers are emerging as high-speed trading hubs. “This goes way beyond Sweden because it undermines the whole idea of competition between exchanges if someone can dictate who gets into which data center,” Neiglick told the FT.