Best Co-Lo Facilities Provider: Equinix02.20.2014
DURING 2013, data-center provider Equinix continued to execute on its strategy of bringing together network providers, asset managers, brokerages, exchanges and trading platforms, as well as market data and analytics providers, into financial ‘ecosystems’.
The idea is to reduce the number, and expense, of high-speed interconnections.
“For capital markets firms, 2013 brought a lot of cost pressures,” said Stewart Orrell, managing director of global financial services at Equinix. “By coming into our data centers, (market participants) are able to drive a lot of cost efficiencies. They can come in and connect to counterparties very easily without having to build a big network topology.”
“Once you get that critical mass of participants, it actually becomes very, very much a cost-efficiency play by being in the same building,” Orrell said.
In addition to cost pressures, capital markets firms have been dealing with a slew of new regulations, such as those coming down from the Dodd-Frank Act, and Equinix has moved to address this issue.
At the end of 2013, 16 swap execution facilities, three primary swap-data repositories, and three designated contract markets dedicated to futurization of swaps and central limit order book formation had located key infrastructure inside Equinix facilities.
Equinix is based in Redwood City, California. The company’s campuses in Singapore, Tokyo, Hong Kong, New York and Chicago have become primary platform locations for swap data repositories. More than half of OTC Access Nodes have located with Equinix in EMEA and Asia, and all registered U.S. CCPs are accessible via access nodes or primary deployments.
“One of the things that we were able to be very successful on last year is that a lot of the new SEF platforms and service providers signed up with Equinix to come together and start forming ecosystems,” Orrell said. “By deploying critical infrastructure in well-connected, service-neutral hubs that already house current and potential customers, firms like MarkitSERV, GFI, ICAP, TeraExchange and others are effectively de-risking the development of the nascent OTC ecosystem by piggy-backing on the benefits of the existing, mature financial-services ecosystem.”
In June 2013, MarkitSERV, an electronic trade processing service for over-the counter derivative transactions, deployed its Credit Centre in Equinix International Business Exchange data centers in New York and Chicago. MarkitSERV Credit Centre is a centralized pre-trade credit checking system that links traders to trading venues, clearinghouses and futures commission merchants in the OTC derivative markets.
Cloud computing and ‘big data’ have special relevance to capital markets, and Equinix moved to address those as well in 2013.
“If you went back ten years and asked firms if they would put their key critical trading infrastructure into a third-party data center, along with other people including their competitors, you would have got some strange looks,” Orrell said. “Giving up that level of control was considered something that was very dubious from security and compliance perspectives. If you fast forward ten years, nobody would think of not having their key trading infrastructure in a co-location environment.”
Some market observers say cloud is at that the same point as physical co-location was a decade ago.
“People are still trying to work out what are the compliance models, what are the risk models around essentially putting some of your key business applications into a third-party, shared type of infrastructure,” said Orrell. “When those issues become resolved, you’re going to see an acceleration of adoption.”
The big-data phenomenon, although not new to capital markets, is being revolutionized by the ability to store and analyze data in shared infrastructure rather than locally.
“What a lot of capital-markets firms do now is store this data individually,” Orrell said. “As a lot of this data is common, there’s no reason that that couldn’t be stored centrally or by several vendors, again, bringing a lot of cost efficiencies to the market. Financial ecosystems enable capital markets firms to store data more efficiently and then use it in more interesting ways.”
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