Equinix executive John Knuff talks company strategy, the importance of neutral meeting places for the global financial markets and the worry that keeps him up at night in a new book of interviews with “agents of change” in the global financial markets.
Knuff was interviewed for Stephanie Hammer’s book, “Architects of Electronic Trading: Technology Leaders Who Are Shaping Today’s Financial Markets.”
The book is billed as “a survival guide for today’s technology-driven financial industry.” In his chapter, Knuff discusses the importance of trading smarter in today’s financial markets and answers questions about their past and future in electronic trading.
Knuff calls the data center the new “Buttonwood Tree,” referring to the tree on Wall Street under which 24 stockbrokers gathered to sign the 1792 agreement that started the New York Stock Exchange.
“As trading functions have been transferred from humans to machines, the data center has become a meeting place for computers to meet up easily and without friction,” said Knuff, Equinix’s general manager of global financial services.
“Our value – and the value of any data center – is now measured in the ability to connect customers to key systems,” he said. “… In a well-populated data center businesses can virtually meet more of their peers and develop joint opportunities for growth.”
Knuff said data centers streamline the business process and help bring market stability. But the single greatest “value-add” to using a data center is the ability it gives users to save costs, he said.
“As the number of inputs to trading decisions continues to grow, firms require more bandwidth,” he said. “Implementing these must-haves with a data center drives cost down.”
Demand for data center capacity continues to grow, and Knuff said it takes a tremendous amount of fiscal discipline for data center operators to keep pace with it. New data centers cost $200 million to $300 million, which is why Equinix’s strong finances give it an edge, he said.
Knuff said Equinix has made a conscious decision not to implement the most advanced technologies.
“We avoid introducing technology where it is not needed in order to reduce complexity,” he said.
That’s benefitted financial services customers in terms of both costs and security, he said.
“Our simple model, which is providing physical connections, reduces opportunities for vulnerabilities in the chain. … They cannot get this type of security in the back of a corporate office,” Knuff said.
Knuff acknowledged certain worries keep him at night.
“Overregulation is probably the biggest concern because it has the potential to unleash unintended consequences,” he said.
“I spend a lot of time educating regulators on the financial ecosystem and interconnectivity so that they can understand what ripple effects may happen as a result of proposed regulatory changes,” Knuff said.