All Roads Lead to Carrier Hotels03.07.2014
Exchanges capital markets firms, and data providers are checking in to carrier hotels such as 111 8th Avenue and 60 Hudson in Manhattan, and 350 E. Cermak, where long-haul carriers meet with local carriers, who can pull data the last mile, Internet providers peer with each other, and large corporate enterprises obtain low-cost connectivity.
Today’s global, multi-asset class and highly fragmented capital markets rely on connectivity as the basic life-blood of the infrastructure. With the exception of a few market makers or HFT strategies, nearly all firms will place a heavy emphasis on high-performance connectivity.
“For companies ultra low latency isn’t as important, but low latency to multiple venues from one point it, it makes sense to use a carrier-neutral facility,” said Ben Gonyea, vice president of product management at data center provider Telx. “If somebody’s not concerned with ultra, ultra low latency where they’re first looking to do proximity within the same data center as the exchange, then carrier hotels make sense.”
In fact, the shortest distance between two points, latency-wise is often through a carrier hotel.
“111 Eighth Ave. has a lot of the Jersey pairs, like Secaucus to Carteret,” Gonyea said. “Latency between those sites, through 111 Eighth Ave. is actually shorter than if you’re finding a route that never leaves New Jersey. We do see a lot of people come in to 111 Eighth Ave. through 350 Cermak because there’s a handful of POPs [points of presence] within the building, and because that’s where all the backbone fiber terminates, they can get very low latent routes to other destinations.”
The original financial colocation facilities were not actually the same buildings that housed the matching engines. They were simply the nearest carrier hotels to the engines.
The CME Group data center in Aurora, outside Chicago, at over 428,000 square feet one of the world’s largest data centers, provides co-location services for connecting to the CME Globex platform using CME GLink, which provides up to 10 Gigabits per second of bandwidth. Customers may use CME Cross Connect to connect to other customers, carriers, or content providers.
“CME used to have their matching engine at 350 E. Cermak,” said Gonyea. “Now they have an on-ramp there to take anybody back to Aurora.”
Last June, Telx opened NJR3, a 215,000 square foot data center at the company’s data center campus in Clifton, New Jersey. In July, it opened new space at 32 Avenue of the Americas, another major carrier hotel in New York. Telx continues to operate colo space and the Meet-Me-Room at 111 8th Avenue.
“The idea is the closer you get to where you need to go, the lower the latency,” said Gonyea. “If you can’t sit right next to the exchange, then going into a facility where you have the option of picking any carrier, and going into a facility where all the carriers come in with their own fiber will give you the option to basically be very low latency, maybe not ultra low latency.”
With Zoe Zhang and Richard Knight, Execution Quant Group, CLSA
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