360TCS Data Center Targets Financial Niche

360 Technical Center Solutions (360TCS) has opened a new data center in Lombard, Ill. and is focusing on providing high-density data center space to Chicago-area financial firms. The facility has opened with an anchor tenant in Wolverine Trading, a Chicago trading specialist that’s also an equity investor in 360TCS.

At 8,000 square feet, 360TCS is a relatively small facility, and will be built out in two phases. “We have a unique niche target market,” said Don Welbourn, Director of Sales for 360TCS. “We are not focusing on selling large contiguous footprints. This facility will appeal to a specific type of client. With the center’s high density capabilities, equipment that would occupy 10 or more cabinets in most facilities can be compressed in to three or four.”

The growth of low latency trading has boosted business for providers like Equinix (EQIX) and Savvis (SVVS) in the New York and Chicago markets. Wolverine provides technology solutions for high-performance trading, including real-time market data feeds that enable algorithmic trading. The availability of these data feeds is a key step in attracting trading operations and building a financial ecosystem within a data center.

Wall Street Still Expanding in Low Latency Trading

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. 

Citigroup Buys Wachovia

Citigroup will acquire the banking operations of Wachovia Corp.in a deal that was “facilitated by the Federal Deposit Insurance Corporation,” it was announced this morning. The FDIC is emphasizing that Wachovia “did not fail” but will absorb any losses beyond $42 billion on a $312 billion pool of Wachovia loans in a “loss sharing” arrangement. The unusual agreement - which the FDIC has labeled “open bank assistance” effectively places a ceiling on Citigroup’s exposure to Wachovia’s loan portfolio.

“This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” Bair said. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.” Wachovia bank branches will be open today for business as usual.

The sale adds to the extraordinary consolidation of financial IT operations and data center assets through distress sales driven by the Wall Street lending crisis. Wachovia spends about $2 billion annually on IT. In 2006 it opened a $400 million data center in Birmingham, Alabama to support two existing facilities in Winston-Salem, N.C.  Wachovia has implemented advanced virtualization strategies, as well as a 3D mapping tool for the company’s data center operations.

The Tech Fallout from the Wall Street Crisis

How will the crisis on Wall Street impact the Internet economy and US technology industry? Here’s a roundup of different facets of the crisis’ fallout :

• North American financial companies will slash their IT spending 27.3 percent to $17.6 billion next year, down from $24.2 billion in 2007, according to updated projectionsfrom the Tabb Group, which tracks technology on Wall Street. The vast majority of that decline will be spending reductions due to the failures of Bear Stearns and Lehman Brothers and the sale of Merrill Lynch, Tabb predicted.
• Cash is king for Silicon Valley’s biggest companies, according to Om Malik, who touched base with the valley’s brand names. Cisco has $26 billion in cash, while Google and Microsoft are flush as well. Among companies with a high debt load, Level 3 (LVLT)  says it has no major debt payments until Sept. 2009.
• HPC Wire last week raised the possibility that the crisis could spark additional investment in high performance computing (HPC), particularly for number-crunching in risk management. “Given the likelihood of regulatory changes for the financial services market, along with the obvious need for better risk assessment and management, higher productivity, greater cost-efficiency and more advanced global economic modeling, it seems all of the right drivers are there,” writes Diane Lieberman.

Lehman spent $1.1 Billion on IT in 2007

Lehman Brothers spent $1.14 billion on information technology in 2007, while Merrill Lynch invests up to $4 billion annually in communications and IT. Those numbers hint at the potential impact of the current Wall Street crisis on the IT industry. 

Many of Lehman’s IT operations and assets may find buyers in the wake of yesterday’s Chapter 11 filing by the investment bank’s parent company, according to Computerworld. Lehman was an active player in algorithmic trading and “dark pool” equity markets, often partnering with other Wall Street firms or specialists in financial trading technology. Those partners are likely candidates to line up to buy Lehman’s IT assets, which will likely be auctioned off to the highest bidder by its administrators, PricewaterhouseCoopers, according to Finextra.

Computer Glitches Halt London Trading

Trading on the London Stock Exchange has been halted for most of today due to a “connectivity issue” that has left UK traders unable to respond to a surge in U.S. equities in the wake of the government’s weekend rescue of the Fannie Mae and Freddie Mac mortgage agencies.

The London Times describes what’s known of the problem:

The LSE suspended connection to the exchange before 9am today after some customers experienced problems. The operator admitted it was unsure when trading will restart today, while the cause of the problem is not yet known. One City insider said that traders will lose “millions and millions and millions” of commission on deals, adding that today’s closedown is “very serious and disastrous.” It appears there is a fault with the SETS electronic trading platform since the Johannesburg Stock Exchange also suspended trading.

See The Register and Larry Dignan for additional coverage.

Stock Exchange Expands Colocation Services

The huge rise in automated “low latency” trading has boosted business for data center providers that can offer high-speed access to process financial data and trades, especially Savvis (SVVS) and Equinix (EQIX). But the growth of low latency trading has also been good for stock exchanges that offer colocation services.

In the latest sign of this trend, The London Stock Exchange this week announced the launch of Exchange Hosting, a service providing algorithmic trading firms with the fastest access to the exchange’s trading and information systems, known as TradElect and Infolect. Trading firms can colocate their servers within the exchange’s data centre, providing low latency access to the TradElect matching engine and Infolect market data.

All About Latency, and How to Master It

Todd Hoff has put together many excellent resources on his High Scalability site. One of the most impressive efforts yet is a new post on latency titled Latency is Everywhere, and it Costs You Sales. The article explains latency, looks at common causes and the best techniques for managing latency, and concludes with an epic list of links to resources. It’s a lot to absorb at once, but will be a worthwhile bookmark.

1 Million Messages A Second for Trading System

A financial trading system has executed 1 million messages per second, establishing a new speed record. The landmark was announced jointly by Sun Microsystems and Intel, which designed a low-latency system for the Thomson Reuters Market Data System, a platform used by Wall Street financial houses to aggregate data and complete trades.

“We’ve broken the 1 million messages per second barrier using off-the-shelf Intel-chip hardware and Solaris 10,” Ambreesh Khanna, CTO for Sun’s financial services division, told Network World. “Reuters Markets Data System is widely used to aggregate information, and algorithmic trading is one reason market data has more reason to focus on latency.”

Telx Powers Low Latency Trading for 7Ticks

7Ticks, which provides managed hosting for financial trading, has expanded its infrastructure into Telx’s New York facility located at 111 8th Avenue. The expansion provides 7Ticks with low latency connectivity to its operations at the 350 East Cermak carrier hotel in Chicago, which has the quickest access available to the Chicago Mercantile Exchange (CME) matching engines that execute electronic bid and ask transactions for the exchange.

7Ticks is based in Chicago and designs low latency trading solutions for financial transactions, including managed high-speed access to the CME and other leading international exchanges. The company also provides direct access to the Intercontinental Exchange (ICE), a global commodity and financial products marketplace, including the world’s leading electronic energy markets and soft-commodity exchange.