Capital markets firms are soaking up IT services as they cope with myriad technology issues associated with data management, globalization, and regulatory change.

The demand for industrial-strength computation power exceeds the capacity of even the largest financial services companies, which is leading them to seek cost-effective solutions via external providers.

“With Dodd-Frank as well as other regulatory reforms, clients above all else need to be flexible and adaptable,” Varghese Thomas, global head of financial services at Savvis, told Markets Media. “We see regulatory compliance as driving demand for IT because of the need to model risk in real time, which involves compute-intensive simulations.”

Savvis, a provider of cloud infrastructure and hosted IT solutions, has broadened its reach into financial services to include middle- and back-office apps.

“We’ve diversified to manage not just trading applications, but also enterprise applications,” said Thomas. “Our ecosystem encompasses a range of service providers, such as OMS/EMS, market data and networking.”

Savvis hosts trading systems and matching engines for many liquidity venues, including traditional equities and derivatives exchanges, dark pools, crossing networks, and ECNs.

The financial vertical represented 28 percent of total Savvis revenue, or $72.9 million, the first quarter of 2011, up 31 percent over the year-earlier quarter. Over 200 securities and trading firms are located in it NJ2 data center in Weehawken, N.J., including investment banks, broker-dealers, market makers, prop and quant traders, and service provides.

Matching engines for five of the nine largest U.S. equity dark pools are located in NJ2, which is responsible for half of average daily volume traded in U.S. equities dark pools.

“The face of modern trading is not the exchange floor, but computers talking to each other in data centers such as NJ2,” said Tony Kroell, vice president of product marketing at Savvis.

Savvis Market Infrastructure, Savvis’s latest offering, is a technology and commercial model incorporating co-location, managed hosting and cloud computing, with supplementary compute, storage, security and network services.

By providing an on-demand technology platform, the Savvis Market Infrastructure is intended to shield clients from critical but commoditized infrastructure work.

Market data is a core component of the Savvis Market Infrastructure, including market data delivery and connectivity between data centers, clients, trading partners are execution venues.

“A lot of service provider tend to focus on co-location or networking, whereas we provide a portfolio from colo up to cloud computing,” said Thomas. “We host a number of execution venues across asset classes in our data centers, and are building out our services continually.”