Co-Location: More than About Latency

Terry Flanagan

Co-location has been a linchpin of high-frequency trading and market-making, but the emphasis within capital markets has shifted from blinding speed and low latency toward infrastructure and application development.

“The drivers of outsourcing, co-location, and hosting have changed significantly,” said Roji Oommen, managing director, financial services, at CenturyLink Technology Solutions. “For asset managers, we see cost-cutting and legacy IT consolidation as the primary drivers to adopt cloud-based solutions.”

Asset managers are deploying cloud-based technology for running their infrastructure. The cloud outsourcing model, which comes in a variety of favors—Infrastructure as a Service (IaaS), Software as a Service (SaaS), and Platform as a Service (PaaS)—enables hedge funds and other asset managers to leverage a shared IT platform at a fraction of the cost of maintaining one in house.

Earlier this year, CenturyLink launched Hyperscale, a set of “high-performance server instances” offered through its CenturyLink Cloud platform. The service is designed for web-scale workloads, big data and cloud-native applications, the company said.

“New applications are crucial to delivering a competitive advantage for enterprises, and Hyperscale is the ideal service for these workloads,” Jared Wray, CenturyLink Cloud chief technology officer, CenturyLink Technology Solutions, said at the time of the launch in February.

Oommen said: “Hyperscale is very, very high-performance cloud, and we’re seeing a lot of interest from capital markets firms.”

While latency is still a driver for co-location, the emphasis now among capital markets firms is to get out from under expensive legacy platforms. “The big push is broadly about effective cost management,” said Oommen. “Technology is fairly commoditized and it’s probably pretty difficult to differentiate when you’re under pressure to reduce cost. There’s this tremendous pressure to do anything they can to creatively manage their internal cost base. We’ve seen much more interesting outsourcing opportunity than we would have a few years ago.”

Last year, CenturyLink acquired Tier 3, a provider of public cloud services based in the Seattle area, and rebranded it as CenturyLink Cloud. Tier 3’s products form the foundation of CenturyLink’s cloud strategy and anchor the CenturyLink Cloud Development Center.

CenturyLink also this year announced expansion plans for the CenturyLink Cloud network of public cloud data centers, growing from nine to 13 locations in the first half of 2014. Starting in March, customers have been able to deploy virtual resources in Santa Clara, Calif., and Sterling, Va., with locations in Paris and the London metro market coming online in the second quarter of 2014.

Featured image via Dollar Stock Photo

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