Saturday, November 27, 2010

NYSE Euronext Using New Hubs to Create 'Global Community' of Traders


>>NYSE Euronext said it was creating a global network of as many as 40 "liquidity hubs" in data centers around the world.

The "hubs" will be located in facilities operated by data center specialists such as Savvis, Equinix and Telx, according to Stanley Young, the chief executive of NYSE Euronext’s technical services arm, NYSE Technologies.

The exchange operator and supplier of exchange technology said it did not plan to build more large data centers like those it has just opened in Mahwah, N.J., and Basildon, England. Those two facilities, which it considers to be its “anchor hubs,’’ have cost NYSE Euronext more than a half-billion dollars to build.

The new "hubs" for providing market access, market data and risk management services to banks and trading firms will be radically smaller. Each is likely to require less than 1,000 square feet of space at the start, Young said.

By contrast, the Mahwah facility, built from scratch, spans 400,000 square feet. Each of its operating "pods" are 20,000 square feet.

Expansion of each “liquidity hub” will be determined by customer demand for services, which eventually is likely to include the co-location of trading firms’ and vendors’ servers in the space.

About 20 of these hubs will be set up in the next two years, Young said, and as many as 20 more by the end of 2013.

In the first quarter of next year, liquidity hubs will be set up to serve banks, brokerages and trading firms in Frankfurt, Lisbon, Paris and Milan, Young said. Sao Paolo, Brazil, and Toronto, Canada, are coming in the second quarter. Tokyo, Hong Kong and Singapore are all potential second quarter startups as well.

"Each of the hubs will have their own communities attached to them, depending on what the local need is. Those local communities will link together to be a global community,’’ Young said.

There is already precedent for NYSE Euronext to use facilities managed by outside hosting services. The company, for instance, already operates an access point to its Secure Financial Transaction Infrastructure at an Equinix facility in Chicago. This site will become a liquidity hub, Young said, as will other access points in New Jersey and elsewhere.


The overall investment by NYSE Euronext also will be small. The initial capital investment in each “liquidity hub’’ is likely to be on the order of $50,000 to $100,000.

That puts the cost of 40 such hubs at under $4 million – compared to $250 million a copy for each of the “anchor” hubs in Mahwah and Basildon.

Savvis, Telx or Equinix already host exchange operations or backup facilities for Direct Edge and BATS Exchange, upstart rivals to NYSE Euronext. Nasdaq OMX Group operates its national market in a facility operated by Verizon, the large communications firm.

The deployment of the liquidity hubs was first reported by Dow Jones.

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