SEC to Regulate Nasdaq's Co-Location

from tradersmagazine.com:

Co-location is a service offered by market centers and third parties, such as Equinix, that involves making rack space available to firms for their trading servers in facilities near market centers' matching engines.

Nasdaq works in partnership with Verizon, but largely controls the marketing and management of its co-location efforts. NYSE Euronext does everything on its own. (The exchange operator would not comment on whether or not the SEC intends to oversee its services.)

The other two major market operators--BATS Exchange and Direct Edge, an ECN--have chosen not to get into the business of selling rack space. They have entered into agreements with Savvis, BT Radianz and Equinix to market and manage their co-location efforts. Placing one's trading server nearer to an exchange matching engine reduces communication times, increasing the chances of beating competitors to profitable trading opportunities.