Low-latency connectivity continues to be an area of spend for most trading firms, and tapping into far markets is one of the focuses. IntelligentTradingTechnology.com caught up with Jock Percy, CEO of Perseus Telecom, to get some insight into the action.
Q: Let's start with an update on the transatlantic link - QuanTA. How's it going? What's the take up been? Is Phase 2 going ahead?
A: The fastest transatlantic connectivity, QuanTA, is proving to be a crucial link for all of our ultra-low latency trading customers. Traders looking to access the multitude of US and European markets are able to connect from any of the US trading locations (e.g. NYSE, CME, BATS) to Slough, London and Basildon plus any European matching host location on the Perseus network (Frankfurt, Stockholm, Moscow, Madrid, Milan), whatever market is built into their strategy. In addition, Perseus Telecom offers the fastest route from London to Brazil packing a one/two punch for those seeking arbitrage opportunities between equities, commodities and futures markets in Europe and Latam.
We are constantly innovating and customising our offerings to retain and maintain our "fastest" reputation. Whilst it is no easy feat, we pride ourselves on delivering exactly what we are doing internally to manage expectations externally.
The take up of QuanTA has been excellent and the feedback we have had from customers is that Perseus delivered real value. The system is very close to a sellout. Phase 2 is in process and we are keeping our customers fully updated. We also will keep the market in the loop on our release date. Current and interested parties may contact us directly to join the beta of Phase 2.
Q: You're also providing service between Nasdaq and BM&F BOVESPA in Brazil, with Alpes and Link Investimentos already signed up. What are you offering?
A: As stated above, Perseus Telecom offers the fastest route from London to Brazil which services all of our trading customers. We offer service from 10Mbps to 10Gbps, fully protected, and also provide Fastest and Fast options. On June 12, Perseus Telecom was awarded the 2012 Best Innovation Award by Global Telecoms Business in London for building the fastest route between London and Brazil. We were so thrilled to accept this award on behalf of the community. Sometimes we step back and realise our achievements, but we are driven by our goals. To that end we will continue to optimise this link, both terrestrial and submarine.
Q: What is the offering for Brazil and what do Alpes and Link Investimentos get to offer interested BOVESPA traders?
A: We offer the most streamlined, lowest latency route directly linking Sao Paulo's BM&F BOVESPA to New York's Nasdaq OMX, and in turn, routes to major global exchanges such as the CME, NYSE, BATS, LSE, Deutsche Borse and Eurex. This ultra-low latency route completely avoids the highly congested NYC metro area and connects directly to the New Jersey data-centers; specifically NASDAQ, then on to Equinix NY4 for example.
Alpes and Link Investimentos are now able to capitalise on trading firms looking to increase exposure to Latin America and who are keen on diversifying their product portfolios. By acting as Primary Brokers with unsurpassed local knowledge and technology, international firms may trade on the fastest connection with Perseus Telecom and choose to keep their accounts either with Alpes or Investimentos, or both, for risk diversification.
Q: There's a lot of discussion these days about the cost of achieving the lowest latency, and how some trading firms are taking a more measured approach. What's your best advice on this?
A: There is no doubt profit margins shrink as markets grow and competition increases. However, our financial market customer base really represents the most sophisticated of the bunch. As their electronic trading strategies evolve to include and/or exclude viable markets to trade in the constant hunt for liquidity; we will continue to offer the fastest route to these venues.
Seeking the most seamless and fastest connections is a matter of logic and budget. I often use a Formula 1 analogy to describe electronic trading outside the industry and there are some very good examples of F1 teams chasing the last elusive tenth at a cost of millions, only to encounter a rule change or an eclipsing technology. ROC must be measured carefully as ultra-fast connectivity is just part of the game; a necessary tool.
Q: So where do you expect the next action to be in terms of market connectivity? Is it going to be in Asia? Russia? What are the drivers? And will it be back to 'spend anything' to be the fastest?
A: The action is happening as we speak! It is both organic and regulated change. No one is likely to try to put the low latency-rabbit back in the hat and government and regulators are at least consistent in their engaged approach. Recently MiFID II prescribed all voice broking to end in the next five years. A fully electronic trading community is just part of a natural growth in technology developments and efficiency. Perseus Telecom is in an established position to provide worldwide connectivity with the fastest routes and reputable partnerships. When the five year mark arrives for the electronification of all markets in G20, most likely, we will be working with most trading entities as they bridge to become fully transparent and regulatory compliant.
Perseus Telecom offers the fastest connections to Asia and Moscow, Russia. Intra-Asia, especially, Tokyo, Seoul, Hong Kong and Singapore, leading banks and hedge funds are expanding into Seoul and China via Hong Kong as Europe and USA mature and rebuild. Seoul has fast become a global futures trading hub and Hong Kong is the gateway to China, and as many as a billion new retail customers.
For Russia, the merger of MICEX and RTS mean probable technology improvements at the matching host and lower risk levels. This suits our customers who want liquidity, but not at any risk level. Similar to Brazil, local brokerages will work to provide the fastest trading connectivity to the Russian matching engine as well as market and sell to international trading customers. The best way to provide the best service is to do it fast and efficiently, this is where we come in and where we stay, based on demand.
Q: Going back to QuanTA, you managed to speed up an existing cable by deploying the latest network equipment. What do you see as the next advances in that area?
A: It's difficult to say what is next without giving away too much, but there are technology swaps and transfers going on right now that will enable us to use existing optical fibre assets for many years to come without the need to build more. For both increased capacity and lower latency.
Q: To finish, what's next for Perseus? Is it new routes, new services for different markets, partnerships?
A: Perseus Telecom will continue to serve our very sophisticated trading customer base. We are constantly innovating and expanding to optimise the opportunities available to the financial community as whole. We value our partnerships with small and larger customers equally, from Fortune 500 to smaller break-away proprietary trading companies.
Perseus Telecom recently won the Global Telecoms Business (GTB) 2012 Award for Best Innovation in Financial Services for the fastest connection to BM&F BOVESPA. Our company is still under 50 people, soon to double by the end of the year. The fact that such a small company can have such a serious impact on emerging market growth is incredible. History is beginning to show that focusing on core competencies and efficiencies will carve a nice runway to success in this highly competitive market. Everyone needs connectivity and many need the fastest connectivity from points A to Z or derivation of A thru Z. Perseus Telecom is determined to deliver value to our customers through fastest connectivity; it is what are our customers need and what we are in a position to provide, but we're also providing a fully managed service that includes co-location, deployment, monitoring, visualisation and management. We’re enjoying all of it.