Rewriting the Rules for Financial Trading Infrastructure

John Knuff

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By John Knuff (Part 1 in an 8-part series)

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The technology arms race continues, as does the roller coaster ride of global financial markets.

Yet the real revolution lies in distributed trading, a new globalized way to do business, being pioneered by the high frequency trading (HFT) community, but increasingly applied by all market participants.

We call it next generation machine-to-machine e-commerce (M2M 2.0).

The first generation of algorithmic traders found advantage in a single trading engine colocated near the main market for low-latency execution.

Now M2M 2.0 is all about diversifying strategies and distributing software intelligence across multiple markets and asset classes to leverage a wider range of resources and control costs throughout the whole trading community. This has boundless applicability.

The rise of M2M distributed trading is also rewriting the rulebooks for managing the total cost of ownership (TCO) of trading infrastructure. In particular it is increasing demand for global multitenanted, network neutral data center facilities.

Indeed M2M 2.0 transforms the data center from a local cost center, housing IT equipment and backup systems, to a reliable profit center enabler, hosting mission-critical marketplaces, where both local and remote computers transact business as one global ecosystem.

Data center proximity and colocation services therefore enhance the agility and efficiency of all market participants, whether high or low frequency traders.

Both firms that locate servers within the shared spaces and those that access such services over their preferred networks can both drive new business and optimize their own supply chain.

By understanding the competitive advantages of the new rules of M2M 2.0, all investment firms can trade smarter to drive profit from emerging global opportunities.

The rise of M2M distributed trading is rewriting the rulebooks for managing the total cost of ownership of trading infrastructure.

The New Rules for Global Distributed Trading

  • The ever accelerating pace, scale and diversity of markets
  • Agility demands non-stop adaptation
  • Clustering creates choices
  • Deconstruct to reconstruct
  • Longer but faster end-to-end supply chains
  • Leveraging network neutral ubiquitous connectivity
  • Right time processing of alpha and risk
  • Pay as you grow finance
  • Competitive component outsourcing
  • Community = know-how + resources

Coming Up in Part 2: Learning a New Rule Book.

Distributed trading, or M2M 2.0, requires firms to apply a new set of rules to optimize cost while drawing on an ever-widening range of data sources, cross asset opportunities and supply chain skills.
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About Equinix in the Global Financial Markets

Equinix, Inc. (NASDAQ: EQIX) provides global data center services that ensure the vitality of machine-to-machine e-commerce. Some 400+ buy- and sell-side firms have come to value the agility that our network-rich International Business Exchange™ (IBX®) data centers now provide by operating across 38 markets in 12 countries on five continents, including all of the world’s top financial centers. From New York to London or from São Paulo to Singapore, Platform Equinix contains the world’s most robust and mature financial ecosystem with 99.9999% uptime.
Our community includes 60+ innovative trading platforms like Chi-X, EBS, SIX Swiss Exchange, Deutsche Börse and Bloomberg, 150+ financial e-services providers and 680+ networks. These networks in turn link through to thousands of other firms or markets to form a global ecosystem offering fast scalability and customized service across today’s diverse and uncertain global financial system.

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Learn more at: www.equinix.com/industries/financial-exchange/

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