A data centre services provider and a trading platform provider have created a community in the cloud where customers can co-locate their trading equipment to avoid latency issues often encountered with remote connectivity.
Financial institutions that want to connect with Alpha Trading Systems Ltd.’s exchange platform, housed in Q9 Network Inc.’s Toronto data centre, can either house their own equipment in the same location or use the facility’s managed infrastructure services.
The close physical proximity of customer equipment with the exchange platform provides a low-latency trading environment, said Osama Arafat, CEO of Q9 Networks.
“With high-frequency trading, low latency and high speed is crucial,” said Arafat. “To minimize the latency and have the best speed possible, you need to co-locate those computers systems as close as possible to each other.”
Karl Ottywill, chief technology officer with Alpha Trading Systems, said he’s observed an explosion of high-frequency trading in Canada in the past several months. Providing a co-location service to customers allows Alpha Trading Systems to expand into that market, said Ottywill.
The company’s trading engine has been hosted by Q9 for the past two years, said Ottywill, and building out this ecosystem brings subscribers to that location as well.
“A lot of that is driven by folks that want speed, and that speed is putting their boxes close to our boxes and cross-connecting essentially into our infrastructure,’ said Ottywill.
Carmi Levy, an independent Toronto-based technology analyst, said the close proximity among parties’ equipment does address the usual issues of latency, which is particularly crucial in industries like financial services where “entire fortunes can be won or lost based on the precise timing of a particular trade.”
But, he added, from a disaster recovery standpoint, co-locating everyone in the same technology hub can represent a point of vulnerability. “The IT department would want to ensure its failover and recovery plans include alternate sites if the business need dictates it,” said Levy.
As offerings like this become more popular, Levy said infrastructure services providers will be forced to offer multi-site and geographic redundancy to address potential disaster recovery concerns.
Arafat said the top three priorities he’s hearing from customers today are “reliability, reliability, reliability,” because they need the assurance that infrastructure services providers are able to host their mission-critical systems.
Q9 Networks operates data centres in Toronto, Calgary and Brampton. The company recently announced the opening of a third data centre in the Calgary area.