Data Centers Not Owned by Exchanges Can ‘Tilt’ Field, NYSE Says

from Bloomberg Businessweek:

>>Data Centers Not Owned by Exchanges Can ‘Tilt’ Field, NYSE Says

NYSE Euronext, the largest stock- market operator, said U.S. regulators should boost oversight of the data centers providing services to brokers and high- frequency traders to ensure that the companies operate fairly.

NYSE, which is building two data centers outside New York and London, said in a letter published on the Securities and Exchange Commission’s website yesterday that rival offerings from Savvis Inc., Equinix Inc. and Telx Group Inc. should be forced to operate as facilities of regulated exchanges to prevent a “tilted playing field.” The access they provide to the main computers of exchanges, called co-location, allows firms to transact orders faster.

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Lowering Costs for Customers

Equinix, a provider of co-location and connection services between 18 markets in the U.S., Europe and Asia, also told the SEC that data centers shouldn’t be controlled by exchanges. Independent data centers lower costs for customers by enabling them to connect through multiple network providers and choosing which products they want, the Foster City, California-based firm said in an April 20 letter to the commission.

“It is not appropriate to consider Equinix data centers as ‘facilities’ of an exchange or trading center, even if exchanges have good reason to consider them as a potential new profit center,” the company said. It said that exchanges moving into this business could force customers to “purchase additional services in order to gain the benefits inherent in data center co-location and interconnectivity.”