Data Centers More Than About Data
Data centers have become the nerve centers of financial markets, hosting exchanges, matching engine, ticker plants, and the complex telecommunications and servers needed to support them.
Key factors in selecting a data-center provider include enhanced disaster recovery strategy, capacity and scalability support for customers, as well as the ability to expand geographically.
“In Europe and the U.S., you have these very concentrated sets of clients who are trading together,” said Stewart Orrell, managing director of global financial services at Equinix. “In Asia, because the markets themselves are more fragmented, and you have different regulatory requirements as you go across the markets, there’s not one or two centers where everybody goes. What you find is the deployment in Asia is spread across more markets, because essentially it’s not one regulatory framework like the U.S. or Europe.”
By using data centers and the cloud, market participants can connect to counterparties easily without having to build an expensive network topology.
“Capital markets has been very successful for us, not only from from the trading side, but also from the infrastructure side,” said Orrell. “Because we have a lot of cloud providers, it makes it a very interesting place for people to bring their applications and tap into those resources. Capital markets continue to be very successful globally.”
Most cloud-based offerings handle data backup disaster recovery and business continuity as part of the offering, so data centers are a natural destination for cloud-based service providers.
“We leverage the Equinix Data Centers, which are the most secure and the industry standard for the financial services community,” said Robert O’Boyle, executive vice president at Liquid Holdings, a provider of cloud-based services to hedge funds. “There are multiple data centers globally and each one of those has a live replication of the client’s information, so should there be a catastrophic event say in New York, the client is then immediately routed to any of the other locations for continuation of business without any down time.”
Firms want to scale their business in a cost-efficient way, and data centers provide a way to do that.
“By shifting some of their infrastructure–maybe infrastructure they often use at peak times, or for bursts of traffic or processing from CAPEX, where they buy all their own structure, to a kind of hybrid between CAPEX and OPEX, that really allows them to control costs as they grow their business.”
Data centers today house financial services ecosystems, which include exchanges and trading platforms, as well as market data vendors, a myriad of service providers and hundreds of buy-side and sell-side firms that form a marketplace of electronic trading and financial technology services.
As electronic trading volumes increase and firms deploy more sophisticated, multi-asset trading strategies, they need scalable, resilient and high-performance trading platforms to accelerate time-to-market and maintain their competitive edge.
“Buy- and sell-side firms are now embracing managed trading services, cloud services and co-location centers to control costs and meet the most diverse trading need,” Sang Lee, managing partner at Aite Group, said in a release. “We expect to see a continued increase in the movement toward managed trading and cloud services throughout 2015 as firms look to expand the flexibility, speed and depth of their trading systems while keeping a firm handle on costs.”
Featured image via flickr/Sean Ellis
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