Hardly a week goes by without a few wins in the financial vertical being announced by one of the major network neutral data center providers like Equinix (NASDAQ:EQIX), InterXion (NYSE:INXN) or TeleCityGroup.
Let's start this brief roundup with InterXion. On March 31, the company announced that it will provide its customers with direct, redundant access to the trading systems of Deutsche Boerse Group (OTCPK:DBOEY) . Connections will be available at Interxion's Frankfurt data centre campus.
As a reminder, on July 2010 Equinix and Deutsche Boerse announced the completion of a strategic data center services contract, which will both increase data center capacity and improve execution times for traders. From 2011 on, the Equinix Frankfurt data center will serve as the new main data center for Deutsche Boerse Group, where electronic trading platforms will be deployed and act as the central co-location site for customers of Eurex, the international derivatives exchange, and Xetra, the cash market within Deutsche Boerse Group.
In light of the recent bidding war between Nasdaq (NASDAQ:NDAQ) and Deutsche Boerse for NYSE Euronext (NYSE:NYX), it will be interesting to follow future developments, to evaluate the impact on these recent deals.
On April 5, InterXion announced an agreement with Quod Financial, a global provider of adaptive trading technology, to locate its servers in Interxion's City of London data center. Quod Financial will be offering Interxion customers connectivity to its smart order routing and algorithmic trading products.
On April 7, ICF Systems AG, a full-service IT provider for the financial industry, announced that it was going to to build a point of presence for ICF's managed trading services at Interxion's Frankfurt data center campus. This PoP will allow market participants to cost-effectively connect to ICF Systems' infrastructure and benefit from its market-leading managed-trading services portfolio.
Lastly, on April 11, the company announced that it is receiving increasing interest from market participants wanting to connect to pan-European lit-trading venue Quote MTF. Launched on April 4, Quote MTF is located at Interxion's City of London Financial Hub.
InterXion offers proximity hosting to NYSE Euronext, Bolsa de Madrid and SIX Swiss Exchange, and acts as an accredited provider to the London Stock Exchange.
While InterXion's wins are all related to the European market, Equinix's most recent announcements span from Europe to down under.
On April 12, Equinix announced that Chi-X Australia, a wholly-owned subsidiary of alternative trading venue operator Chi-X Global Inc., had selected Equinix’s Sydney facility as the primary data center for its matching engine. For more information, you can also read our previous article on the announcement.
The day after, the Equinix's European branch announced that the London Metal Exchange (LME), the world’s leading non-ferrous metals market, had opened its first access node offering proximity services, and located in Equinix’s LD4/LD5 London data center campus.
The LME offers a range of futures and options contracts for non-ferrous minor metals and steel billet. In 2010, about 120 million lots were traded at the LME, with a total value of trading on the Exchange of roughly $11.60 trillion.
The LME access node will further attract new trading participants and complement the existing Equities, FX and Fixed Income trading venues already housed in the data center.
This is the very interesting aspect of all these trading wins: The positive domino effect that hosting an exchange generates for the winning data center. These installations are usually made through long-term contracts, and this aspect also contributes to the value of the ecosystem that is being generated within the facility, adding stickiness to all other participants ... another reason why these financial wins represent both a short-term revenue growth catalyst and a long -term value for the winner.
Disclosure: I am long EQIX.