Financial Ecosystem Growth Confirms New Industry Direction

Financial Ecosystem Growth Confirms New Industry Direction

At Equinix, we have noticed an emerging trend in financial services: exchanges and trading platform companies continue to invest in global expansion despite broadly challenging industry conditions.

Just ask John Knuff, general manager of Global Financial Services for Equinix – he’s seen it firsthand. “We now have 115 exchanges and trading venue deployments inside Equinix facilities around the globe, up from 75 last year. The growth is being driven by new exchanges joining the ecosystem, including LMAX in London, MIAX in New York and MICEX/RTS in London, as well as existing exchanges deploying a local presence in foreign markets, including NYSE in Hong Kong and Tokyo, SIX in Tokyo, and CBOE, CME and Nasdaq NLX all deploying in London.”

Financial Services revenue in 2012 led growth for the company, up 24 percent year over year. Asia-Pacific also grew revenues substantially year-over-year in the financial services vertical, driven by multinational deployments into the region, including strong growth among foreign exchange trading firms into Tokyo.

The consolidation of core electronic trading infrastructure of the global financial services industry inside neutral data center hubs solidly confirms the shift to a new paradigm, where interconnected market participants are organized in optimal communities. The sheer density of interconnected platforms and participants in our New York, Chicago and London campuses are leading examples of this major change in the overall trading landscape.

Knuff explains how electronic trading systems are now optimized in “digital cities,” or secure data center campuses, where close proximity and shared infrastructure give financial firms the ability to scale new business models that drive down costs while they maximize innovation.

“Proof positive of ecosystem health is the tremendous growth in interconnection we see between financial services firms and counterparties, which leads across all Equinix verticals. Cross-connections in our New York metro campus have seen a 45 percent organic compound annual growth rate from March 2010 through March 2013,” Knuff said.

Knuff continued, “The major trend is that global financial regulation is driving technology investments in risk, compliance and electronic trading. A good example is the Over The Counter derivatives market moving on to trading platforms, commonly referred to as Swap Exchange Facilities in the U.S., or Organized Trade Facilities in Europe. These electronic trades must then be cleared by Central Counterparty Clearing Firms and stored in Global Trade Repositories. Equinix has signed some of the leading providers in each of these service areas in the EU, AP and US, all of whom directly connect to one another inside the ecosystems you see in Equinix facilities today.”

“With this success, we continue to build out and promote our financial services team. I’m delighted to announce that Stewart Orrell has been promoted to managing director of Global Capital Markets. Stewart has been critical to our strategic growth since he came on board in 2009. We’ve also hired financial industry veteran Barry W. Smith, who brings a wealth of experience and will direct our exchange and trading platform strategy into the future,” Knuff added.

Subscribe to the Equinix Blog