Just a few days ago we noticed that the Chicago Board Options Exchange (NASDAQ:CBOE), the largest U.S. options exchange, had announced that it was moving operations of its CBOE Stock Exchange (CBSX) from Chicago to the Equinix (EQIX) NY4 data center, already home to other trading exchanges like the Boston Options Exchange Group, etc.
According to CBSX, the initiative has already been very successful, as it allowed the exchange to reduce latency by more than 20 milliseconds (link, subscription required) – while this may sound as a hardly recognizable result, it is of great importance in an industry which is obsessed by low latency, and where high speed trading plays such an important role.
On July 6, Deutsche Börse AG (OTCPK:DBOEY) confirmed that it was trading its Xetra cash market out of an Equinix facility in Frankfurt. With this move, Deutsche Börse Group will be capable of offering to its clients co-location services in the same facility (a nice domino effect for Equinix, that will benefit from increased demand of colocation space).
Among other financial companies utilizing the Equinix facilities in the same region, we may remember NYSE Euronext (NYSE:NYX), that opened a cross-connect access to its Secure Financial Transaction Infrastructure European network for lower latency access to the Liffe Connect global derivatives trading platform back in 2009.
On July 11, Equinix announced that it opened another 4,000 square meters of customer space (1,400 cabinet equivalents) in the London metropolitan area (LD5 phase 2). Among the drivers for this further expansion, the press release mentioned the need to support customers’ growth, as the campus is “home to Equinix’s Financial Services offering, an active community of execution venues and other financial market participants, such as Chi-X, State Street Bank and Fixnetix, who locate in close proximity to each other to directly exchange data, speed up execution times and increase trading volumes.”
Today, the company announced that BATS Trading Limited, a global operator of securities and derivatives markets, signed a long-term deal to relocate the BATS Europe trading platform to Equinix’s London LD4 data center. The move is scheduled for October 2011, and the switchover will provide a secure, low-latency, high-performance trading environment for BATS Europe’s integrated and dark electronic trading books.
There are several reasons for this huge activity in the financial vertical. By moving to a colocation partner, financial exchanges can achieve both costs savings, enhance their performance, and be in close proximity to their partners – assuming, of course, they've chosen the right data center provider.
The financial industry has a network neutral future, as resumed in a couple of interesting posts on the Equinix blog, which may be worth a small quote as a summary of the company's success in the vertical:
More than 50 innovative trading platforms including Chi-X, EBS, SIX Swiss Exchange, Deutsche Börse and Bloomberg have all partnered with Equinix to provide their trading communities with high-speed, high-security access.
Our global community includes in excess of 370 buy- and sell-side firms, 180-plus financial services providers and more than 600 networks. Those networks in turn link to thousands of other firms to form a global ecosystem offering scalability and customized service across today’s diverse and uncertain global markets.
With the cost benefits of a flat monthly fee, cross-connecting to counterparties within the neutral ecosystem delivers true agility, scalability, and resilience.
Disclosure: I am long EQIX.