How London’s financial traders seamlessly move datacentre | London Daily News

Ahead of the London Stock Exchange Group (LSEG) datacentre move to a new London site later this year and the recent Euronext relocation from Essex to Italy, we talk to Jeff Mezger, Vice President of Product Management, Financial Markets for TNS, about what to consider for those responsible for electronic trading infrastructure in the Capital to ensure seamless datacentre relocation.

Managing remote data centre space and connectivity is crucial for those responsible for electronic trading infrastructure. Coordinating resources, procuring facilities, hardware selection, project management, system installation, testing and maintenance are complex.

Datacentre relocation is once again front of mind, Euronext migrated its primary datacentre and related colocation services from Basildon in Essex to the Aruba Global Datacentre IT3 in Bergamo, Italy in June 2022 and the London Stock Exchange Group (LSEG) is set to relocate its datacentre from its current London City location to a new London site.

Outsourcing Versus Going Alone?

Trading organisations looking to co-locate in the new data centres need to seriously consider if they have the skills, understanding, resources and bandwidth to make a move themselves. For most, the answer will be ‘no’. They will outsource operations to a managed hosting, colocation and connectivity service provider.

“So far we have moved nearly 20 existing and new customers to Bergamo, providing traders with uninterrupted, seamless trading,” said Jeff Mezger, TNS’ Vice President of Product Management. “Our customers have been able to focus on their core business whilst we have dealt with global supply chain issues to ensure the smooth migration. With suppliers quoting lead times of a year for some equipment, our buying power compared to smaller firms or those attempting to DIY a move, has proved invaluable in ensuring a smooth transition to Bergamo,” added Mezger.

There are clear cost and operational benefits to working with a trading support and data centre specialist. Outsourced providers give access to a suite of services including order routing, market data and the procurement, installation and management of trading infrastructure links. Cost amortization is another plus of the outsourced model. Many companies offer the option to lease hardware rather than paying upfront, this can help smaller companies to manage their cash flow.

Working with a global provider allows clients to benefit from economies of scale, making a managed market data solution not only less complex than do-it-yourself models but a more cost-effective approach too. As exchange connectivity requirements evolve into a labyrinth of paperwork, pricing, physical connectivity options and market data nuances, partnering helps to cut through the administrative burden and costs. Traders can leverage a single source relationship to obtain the multiple feeds they need direct from the exchanges.

Does Low Latency Matter?

Low latency for algorithmic trading is vital. Among many factors that affect latency, hardware location and network connections are key to successfully achieving the lowest latency possible. Trade execution speed is extremely important for profit and loss, and competitive advantage comes from having the best communication links to hardware in the best location.

TNS was the first company to offer ultra-low latency Layer 1 technology inside the data centre. Layer 1 technology enables firms to access execution speeds that are up to 10 times faster than traditional layer 3 architectures. It remains an advanced solution available on a global basis, eradicating the need for multiple switches by using a simple, single-hop architecture to deliver connectivity in as little as 5 to 85 nanoseconds. In addition, TNS has brought Bergamo onto its global network, with fully diverse routes from Bergamo locations throughout Europe.

“In my experience there are firms that are very latency sensitive and those that are less so. Our Layer 1 solution is a key differentiator for those with latency driven strategies, whereas a layer 3 standard latency offering can be right for others,” said Mezger. “We offer multiple differentiated services to help all traders, from smaller firms who may only require a partial rack, to tier-1 banks requiring multiple cages.”

Future Proof

Trading firms need to future proof by working with a company with experience in managing multicast market data and able to provide scalable solutions to accommodate ever-expanding bandwidth requirements. As traders diversify their portfolios their market data needs can place excessive network capacity pressures on their infrastructure, sometimes running into tens of gigabits. Seek a provider that can easily accommodate these requirements and handle any bursts as a result of high activity periods such as those seen on many occasions recently due to market volatility caused by the pandemic.

 

Jeff Mezger is Vice President of Product Management at TNS with responsibility for its managed services for the financial industry. The TNS infrastructure brings together over 2,800 financial community endpoints to address the needs of financial market participants worldwide. For more information visit tnsi.com

Feature image by İsmail Enes Ayhan on unsplash

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