Managed service delivery in the low-latency world is an increasing focus as trading firms begin to measure ROI for their IT investments. IntelligentTradingTechnology.com spoke to Scott Caudell, vice president, IT Infrastructure, at Interactive Data, about its 7ticks business, and where it fits in.
Q: To begin with, can you outline what the Interactive Data 7ticks business offers?
A: Interactive Data 7ticks provides ultra-low latency trading infrastructure design, procurement, installation and network hosting services that are enhanced by ongoing management, support and monitoring solutions. Interactive Data 7ticks aligns with clients’ internal resources to provide support and services designed to enable traders from around the world to achieve faster execution times while reducing both complexity and total cost of ownership.
Specifically, Interactive Data 7ticks offers:
Exchange Access – Direct connectivity to dozens of global futures and options, equities and FX exchanges and trading venues for multi-asset class and ultra-low latency trading.
Market Data – Additional access to 450 global data sources via the PlusFeed consolidated feed at each hosting center, as well as an array of ultra-low latency direct exchange connections, corporate actions and reference data.
Co-Location & Proximity Hosting – Proximity and co-location hosting services in Chicago, New York, New Jersey, London, Frankfurt and Tokyo.
Managed Services – Flexible, ongoing support and maintenance of client infrastructure (e.g., network, server, etc.), front office OMS/EMS connectivity, and back office and market data infrastructure.
Performance Monitoring – Innovative 24x7 real-time network monitoring system designed to analyse financial exchange connectivity, network latency, and server and switch performance across the stack.
Bandwidth & Connectivity – Ultra-low latency, carrier-grade trading network between proximity sites. Long-haul connections distribute exchange feeds across some of the fastest available telco paths between sites.
Q: What would you say were the current trends among your customers that you're addressing?
A: As the industry landscape evolves dramatically, technological advances have radically hastened the speed of trading with transactions being completed in microseconds. This has raised the trading infrastructure stakes for financial firms, who now need low-latency data feeds and support for high frequency transactions in order to stay competitive. Yet the upfront costs and ongoing maintenance and support demands of a low-latency infrastructure are daunting, causing our customers to explore managed services for cost control and enhanced service.
Additionally, the increasingly dynamic regulatory environment is causing financial firms to re-think their business and business models. While we collaborate on solutions with our customers at Interactive Data 7ticks, they are adapting the ways that they are doing business and preparing for changes in regulation. Finally, there is a growing need and drive for transparency, and our customers are becoming far more knowledgeable about the levels of service that they expect and transparency that they require.
Q: And how have you extended your offering, in terms of connectivity and geographical footprint in recent months?
A: The Interactive Data 7ticks business recently added direct connectivity to the London Stock Exchange (LSE), Turquoise, Italian Derivatives Exchange Market (IDEM), Bolsas y Mercados Españoles (BME), London Metal Exchange (LME), BATS Europe, Chi-X Europe, Quote MTF, SIX Swiss Exchange, Johannesburg Stock Exchange (JSE), and Oslo Stock Exchange (OSE). These exchanges complement Interactive Data’s existing connectivity to a comprehensive set of North American equities, futures, options and FX markets. Interactive Data 7ticks now offers clients direct access to over 50 markets worldwide.
The 7ticks network also cross connects to financial markets in the Asia-Pacific region via data center connections in London and Chicago. Leading financial institutions in Japan are also now accessing the network.
Direct or cross-connect access to a wide range of global exchanges is also available through Interactive Data’s significantly expanded Points of Presence (POPs) with leading global providers of data centers and technology services, including Equinix, Interxion, Telex and KVH.
The expansion of the 7ticks network can also provide clients with additional access locations to global data sources. This access is available via Interactive Data’s consolidated feed, PlusFeed, at each hosting centre. PlusFeed provides comprehensive coverage of global securities from more than 450 sources worldwide, covering more than 130 exchanges and including multi-asset class instrument coverage, and extensive or full-tick Level 2 data.
Q: How do you see the need for co-located vs proximity services shaping up in the foreseeable future?
A: Over the past decade, electronic trading infrastructure has undergone a major transformation. The speed of trading has moved from being measured in seconds in the pit to milliseconds on the screen and now to microseconds with the advent of co-location and automated trading. Ten years ago the word co-location was hardly used and now this and other terms, such as naked access or low latency, are almost commonplace.
Today, exchange co-location is a given in the high-speed trading community in North America, where the market is broadly mature. We anticipate increasing market adoption in Europe and Asia, where current levels are lower than in the Americas, and see a continued and even increasing need for proximity and co-location hosting services globally. In addition to the value that they provide from a latency standpoint, these services can help financial firms minimise costs and points of failure.
Q: And what about the take up of managed services. Is this an offering that is gaining momentum? And with what kinds of trading firms?
A: From our vantage point at Interactive Data 7ticks, the concept of managed services has taken hold and there is growing interest in the offering across a wide range of trading firms. In our ongoing discussions with clients and prospects, the needs to bring down costs and increase focus on their core business are resounding themes. Consistent with these requirements, our managed services offering can help enterprises to:
* Support high-priority, internal constituencies that are implementing electronic trading strategies with low-to-ultra-low latency data requirements.
* Better control the upward spiral of costs associated with internally developed low-latency infrastructures.
* Leverage third-party expertise to oversee the ongoing maintenance of exchange links and updates to exchange data products, as well as hardware, software and connectivity refreshes.
* Refocus internal business and IT staff and resources on more strategic, value-added initiatives that help the firm better compete in challenging global markets.
* Accomplish a broader set of initiatives by scaling execution capabilities with third-party resources.
Q: Specifically, have you co-located at the CME's Aurora facility that opened in January 2012?
A: Given Interactive Data 7ticks relationship with major financial firms seeking ultra-low latency access to global exchanges, we continue to increase our coverage and the availability of our 7ticks network to the electronic marketplace on a global level. As part of this growth, Interactive Data 7ticks is expanding with a hosting presence at the CME Group’s new co-location facility located in Aurora, IL. We anticipate that this new, state-of-the-art data center will be a key Interactive Data 7ticks backbone location, and we are equipping our clients with the complete range of our fully managed hosting and network services, as well as connectivity to other exchange venues.
Q: What else can you share about future directions for your business, or predictions for the marketplace?
A: As traders around the world focus on achieving faster execution times while reducing both complexity and total cost of ownership, the Interactive Data 7ticks business will continue to innovate its trading infrastructure solutions and drive value for customers. As an example of how this commitment is shaping future directions for our business, we are exploring advances in storage and cloud computing that will add significant value to financial firms.
From a marketplace perspective, we expect to see additional consolidation amongst exchanges and turmoil related to the regulatory environment being in flux. Interactive Data 7ticks will assess the impact of these changes and respond as they re-shape how global markets function and our customers’ requirements.