FX: It's co-location, but not as we know it
Space constraints in data centres, coupled with cost considerations, have encouraged firms to seek creative solutions to the challenge of getting access to the main liquidity hubs.
What price low latency? That is the question that more and more market participants are grappling with as they seek to jump on the co-location bandwagon. Data-centre access doesn't come cheap, but there are folk who can help out.
Falling connectivity costs have continued to drive demand for co-location. Data-centre providers have responded to growing demand by opening new floors at established locations such as LD4 in London and NY4 in New York and creating new campuses on adjacent sites.
But the cost of space where the main liquidity hubs are located is a considerable investment. As a result there has been an expansion in the number of managed service providers operating a virtualized infrastructure-as-a-service offering to help FX businesses access these data centres at a lower cost, says John Owens, an electronic trading technology specialist and former VP EMEA sales at Transaction Network Services.
“A managed service provider will typically provide a suite of services including rack space, power, servers and communications, eliminating procurement headaches and capital expenditure requirements for the FX broker,” he explains.