When NYSE Technologies prepared to open its new data center in northern New Jersey, there was some concern from analysts that the NYSE's expanded offering might have a negative impact on colocation firms selling space to high-speed traders. But recent data from one provider suggests it may have had the opposite effect.
In a column at Seeking Alpha, Paolo Gorgo notes a chart from Equinix showing that its cross connect business has accelerated since the opening of the NYSE's Mahwah facility. Gorgo revewed data center competition in the region as Equinix opens its newest data center in Secaucus, known as NY5.
"Even if it may sound counterintuitive, there are several reasons why the opening by NYSE Euronext (NYX) of its own data center facilities around the world often results in more demand for Equinix's services," Gorgo writes. "The fact that NYSE is now offering customers the possibility to collocate at its facility for high-speed access to the matching engines hasn't stopped Equinix from growing its business -- it actually looks as if there's been an acceleration since that time."
What's going on here? Gorgo concludes that trading companies appear to be placing equipment at both facilities, rather than choosing between them.
"While Equinix isn't cheap, the NYSE is even more expensive," Gorgo notes. "Another good reason to keep at its premises just the essential servers needed to interconnect with its exchange, while the networking gear is better located at a nearby facility like Equinix, with a very high number of networks accessible at a cross-connect distance."