Mexico Bolsters Financial Infrastructure02.14.2013
Latin America, and Mexico in particular, is attracting significant investment in its financial infrastructure to facilitate both domestic and international trading.
“Mexico is clearly undergoing a period of rapid change, which is being played out across its technology infrastructure and market regulations and continues to increase its appeal to the international audience. Domestic brokers will need the right technology to capitalize on this attention,” said Alice Botis, head of Latin American business development at trading technology firm Fidessa, in a blog posting. “Many are seeking high-frequency trading algorithms, efficient routing of international orders through low-latency connectivity networks and more sophisticated risk controls.”
Perseus Telecom, a provider of connectivity for financial markets, is launching a new ultra-low latency network connecting Latin America and North America.
The network includes high-availability features to ensure uptime in the event of a natural disaster. “We often hear about networks having 99.999% availability, but that equates to six seconds of outage time per month,” said Jock Percy, chief executive of Perseus Telecom. “It’s a very poor benchmark. A truly available network means 100% availability, which is typically not available at layer two.”
“Financial networks require “deterministic latency metrics. There’s always a chance that a hurricane could knock out two cable systems at once. Our network will have dual protection on four different cable systems. It’s the equivalent of doubling down.”
Perseus Telecom provides connectivity between major North American exchanges, such as Bats, CME, Direct Edge, Nasdaq and NYSE and their Latin American counterparts Bolsa Mexicana de Valores in Mexico, BM&F Bovespa in Brazil and the exchanges of Peru And Chile. “The only market we’re not in currently is Argentina,” Percy said. “Ours is a highly competitive offering for anyone who wants to trade this region. We also extend connectivity to Europe via our transatlantic connectivity.”
As Brazil is positioning itself as the regional hub, and Mila – an integration of the exchanges in Chile, Colombia and Peru – pushes the Andean region forward, it’s understandable that some see Mexico as the middle ground between its neighbors, noted Botis at Fidessa. But the country is undergoing rapid change and is becoming a driving force in its own right within Latin America.
One of the main developments in Mexico is the launch of Bolsa Mexicana de Valores’ Monet matching engine, which was developed in-house and went live in September 2012.
With the goal of providing global investors with more efficient trading and connectivity to Mexico, Monet is designed to deliver 100 microsecond message latency, an improvement of more than 25 milliseconds on the current equities platform, and to increase the number of messages capable of being supported to 200,000 per second, said Botis.
At the same time, the Mexican Derivatives Exchange (MexDer) has entered into an agreement similar to that between BM&FBovespa and CME Group to enable bi-directional order routing. “This partnership will allow participants of the CME Globex trading system to route orders to MexDer, opening up the market further,” said Botis.
Connecting the New York and Chicago exchanges such as Nasdaq, NYSE and CME with Mexico via the Bolsa Mexicana de Valores and MexDer enables Perseus customers to have access to ultra-low latency layer two networking.
In turn, this allows global players to reach the Mexican exchange market in less than half of the current average latency of layer three networks that are in place today, according to Perseus Telecom.
“We’ve got a lot of customer demand in Mexico, which is related in part to advances in exchange technology,” said Percy at Perseus Telecom. “As the exchanges improve their technology, they are able to introduce new products such as those offered by CME, as well as creating their own tradable products.”
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