The Centurylink Technology Solutions Blog - Trends in IT Infrastructure

Results tagged “access to markets” from The Centurylink Technology Solutions Blog

Financial Services IconMy client meetings over the last quarter have put me in front of some of the world's largest investment banks, trading firms and financial institutions. As IT leaders, we all work in a challenging economic climate with increasingly complex demands on our organisations. But my meetings brought into sharp focus the importance of competitive advantage in the industry.

 

In the financial markets, there are two key differentiators on which the IT organisation - and the decisions they make about their infrastructure - can have a direct impact: High-speed trading and access to markets.

 

The revenue potential of high-frequency trading has goaded even traditional institutional trading firms into pressing their IT infrastructures to achieve ever-lower latency and stay competitive. Firms are now jockeying to make trading as fast as possible. Latency is now down to milliseconds, and it's being pushed to microseconds or even nanoseconds.

 

Is this mad dash for lower latency justified? Do miniscule time differences that the human brain has a hard time imagining really matter? The answer is an unqualified yes.

 

High-frequency traders are now significant market players, with estimates placing the percentage of trading volume in the U.S. equities markets at 60 percent and in Europe at 35 percent (Celent, TABB Group, 2011). All this is dramatically changing the competitive landscape and making it more difficult and costly to connect to the numerous sources of liquidity.

 

Technological innovations help solve these challenges -- and create new ones. The virtual "arms race" in ultra-low-latency direct feeds and platforms coupled with the explosion in market data volume creates connectivity issues for trading firms that need to access all the new liquidity venues and blend the data in a way that allows them to intelligently use it in their trading systems. Algorithmic trading is now considered such a standard practice across asset classes throughout the industry that automation is part of the competitive landscape, since deciding manually when and where to trade is virtually impossible with so many venues and when liquidity is shifting from one place to another in such compressed timeframes, at the same time complying with regulations to provide best execution of trades.

 

Trading "ecosystems" increasingly offer an attractive solution to these and other challenges. Such ecosystems bring together liquidity points, content, services and IT infrastructure to enable successful execution of the entire trading lifecycle. Positioned in close proximity to -- or inside -- major sources of liquidity, such ecosystems allow trading firms to shift the burden of technology acquisition, maintenance, and management over to specialists, while supporting critical pre-trade, trade execution, and post-trade activities so they can focus on their core businesses.

 

This ecosystem strategy is one that Savvis has followed with our new London Docklands data centre, LO3. Located at the heart of London's financial markets, LO3 offers opportunities for low-latency connectivity with diverse fibre routes from multiple providers offering connections to the European regions' trading platforms. Colocated financial firms can connect into more than 200 multi-asset global exchanges and alternative liquidity venue feeds. Take a look at http://go.savvis.net/LO3getcloser.

 

Neil Cresswell is managing director, EMEA, for Savvis, a CenturyLink company.

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