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Is NYSE's NJ Data Center A Game Changer?

NYSE Euronext is building a 400,000 square foot data center in Mahwah, New Jersey that will offer a large footprint of colo space for low-latency trading operations.

New Jersey is a hotbed of data center infrastructure to support low-latency trading. Providers like Savvis and Equinix have repeatedly expanded their north Jersey colocation hubs to support the booming business in "proximity hosting" providing traders with warp-speed connections to the servers run by major exchanges.

One of those exchanges is about to get into the game. Seeking to get a bigger piece of the action, NYSE Euronext is building a 400,000 square foot data center in Mahwah, New Jersey that will offer a large footprint of colo space for low-latency trading operations. The facility is expected to come online sometime in 2010.

Analysts and traders alike are wondering whether the new facility will have a disruptive impact on the market for high frequency trading and the lucrative business housing the servers to support it. 

The NYSE's Colo Ambitions
The NYSE isn't bashful in talking about its ambitions for its new data center. "When people talk about the New York Stock Exchange, this is it," NYSE Euronext Co-Chief Information Officer Stanley Young told the Wall Street Journal about the new data hub. "This is our future."

The Mahwah facility is part of a major data center overhaul for the NYSE, which is building a similar center near London, and continues to maintain centers in New York and Paris. The new facilities will provide the next-generation capabilities that traders crave.   

“We are approaching our new data center design with fresh thinking and innovative ways to maximize space and cost to deliver the lowest latency and best performance to our customers,” said Steve Rubinow, co-Chief Information Officer of NYSE Euronext, who said  the new facility will give the NYSE an advantage with “the most obsessive traders.” And for the low latency crowd, the obsession is speed, and more of it.

A Need for Speed
The exchange has been working with a number of technology vendors on maximizing the speed of its trading solutions for the new data centers. Two announcements from June reflect that focus:

  • NYSE Technologies and Infiniband networking specialist Voltaire have tested a trading solution that delivers less than 10 microsecond latency at greater than 1 million messages per second. The setup uses NYSE Technologies’ Data Fabric high performance middleware, Voltaire's 40 Gb/s InfiniBand switches and messaging software, and servers poweredby the new Intel Xeon 5500 processor.
  • NYSE Euronext and Juniper Networks said they are are working together to design an ultra-low latency core network for NYSE Euronext's new data centers, including an advanced 10 Gigabit Ethernet data center fabric that will support  internal latency of 50 microseconds roundtrip. "With Juniper, we are able to dramatically cut the cost and complexity of managing our data center network today, while continuing to enhance our competitive position with a next-generation data center fabric that will enable us to scale to tens of thousands of 10GbE ports," said Rubinow.

The NYSE has also worked with Cisco Systems on an Ethernet-based trading solution using Remote Direct Memory Access (RDMA) accelerators to reduce latency within nodes. RDMA allows data to move directly from the memory of one computer into that of another without involving either one’s operating system. Cisco's  RDMA solution was developed with Wombat Financial, a software unit of NYSE Euronext.

Hiding in Plain Sight
Interest in the new data center has led to an unusual level of awareness about its location. In May we noted a Bergen Record article about the facility, although DCK didn't publish the Mahwah location at that time. Since then the NYSE has provided information about the facility to the  Wall Street Journal, which included a photo of the building and a locator map with its story.  

The NYSE initiative has securities analysts wondering whether the exchange will win business away from the low latency trading operations of other north Jersey data center players, including the Savvis (SVVS) trading hub in Weehwaken and Equinix's growing presence in Secaucus.

"While we recognize there is additional capacity coming in, I think that the overall demand environment is going to continue to drive business for service providers such as ourselves for the foreseeable future," said Phil Koen, CEO of Savvis, in a recent conference call. "We see that as an improving trend."

Equinix has emphasized the global nature of its network of financial trading hubs, with additional facilities in Chicago, London, Frankfurt, Hong Kong and Tokyo.

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