Archive for January, 2010

“Speed is Shaking Up the Brokerage Industry”

Sunday, January 31st, 2010
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“Speed is shaking up the brokerage industry,” Business Week says. Brokerages and trading firms are co-locating their servers as close as possible, in a physical sense, to trading servers used by exchanges.
The reason? Fractions of a second advantages in placing trades. In fact, on Jan. 13, 2010 the Securities & Exchange Commission actually began reviewing high-speed trading, which since 2005 has grown to account for as much as 61 percent of U.S. stock market activity and 70 percent of individual trades, Business Week reports.
And Business Week writes that the speed of trading had something to do with the fact that
Goldman Sachs Group Inc. ousted JPMorgan Chase & Co. as the firm that got the best prices for its institutional clients during Bloomberg’s 12-month ranking period from July 1, 2008, to June 30, 2009.
During that time, stock volatility quadrupled from its 20- year average and the Dow Jones Industrial Average swung by more than 40 percent.
Goldman was the worldwide winner among brokers that handled at least $25 billion in trades in getting an average price closest to the stock level when the order was received, according to Ancerno.
“They have the most developed and advanced electronic systems,” says Roger Freeman, an analyst who covers brokerages and exchanges at Barclays Plc in New York. “They can get some of the fastest execution times on trades, thereby minimizing some potential costs.”
Kevin McPartland, a senior analyst at New York-based Tabb Group says Goldman’s operations were characterized by close and efficient working on the part of software and server technology teams, who were able to optimize the speed of trading.
“Equities is a technology business now,” McPartland says.
If you want to know how low-latency networks can make a difference in terms of business advantage, Goldman shows how.
http://www.businessweek.com/news/2010-01-29/goldman-tops-jpmorgan-as-best-broker-as-speed-shakes-up-trading.html

“Speed is shaking up the brokerage industry,” Business Week says. Brokerages and trading firms are co-locating their servers as close as possible, in a physical sense, to trading servers used by exchanges.

The reason? Fractions of a second advantages in placing trades. In fact, on Jan. 13, 2010 the Securities & Exchange Commission actually began reviewing high-speed trading, which since 2005 has grown to account for as much as 61 percent of U.S. stock market activity and 70 percent of individual trades, Business Week reports.

And Business Week writes that the speed of trading had something to do with the fact that

Goldman Sachs Group Inc. ousted JPMorgan Chase & Co. as the firm that got the best prices for its institutional clients during Bloomberg’s 12-month ranking period from July 1, 2008, to June 30, 2009.

During that time, stock volatility quadrupled from its 20- year average and the Dow Jones Industrial Average swung by more than 40 percent.

Goldman was the worldwide winner among brokers that handled at least $25 billion in trades in getting an average price closest to the stock level when the order was received, according to Ancerno.

“They have the most developed and advanced electronic systems,” says Roger Freeman, an analyst who covers brokerages and exchanges at Barclays Plc in New York. “They can get some of the fastest execution times on trades, thereby minimizing some potential costs.”

Kevin McPartland, a senior analyst at New York-based Tabb Group says Goldman’s operations were characterized by close and efficient working on the part of software and server technology teams, who were able to optimize the speed of trading.

“Equities is a technology business now,” McPartland says.

If you want to know how low-latency networks can make a difference in terms of business advantage, Goldman shows how.

by Gary Kim

http://www.businessweek.com/news/2010-01-29/goldman-tops-jpmorgan-as-best-broker-as-speed-shakes-up-trading.html


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Lexent Metro Connect Adds Low-Latency Route

Thursday, January 28th, 2010
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Lexent Metro Connect, the leading provider of dark fiber networks in the New York metropolitan area, has become part of Switch and Data’s GeoReach program. Lexent Metro Connect has also completed its construction of a low-latency dark fiber network route to Switch and Data’s North Bergen site located at 5851 Westside Avenue in New Jersey.
Lexent provides dark fiber interconnectivity between Switch and Data’s North Bergen and 111 Eighth Avenue, New York, colocation sites and other leading New York Metro data centers and financial exchanges. This critical, low-latency interconnectivity provides high performance access for Switch and Data’s clients in both facilities.
Switch and Data’s GeoReach program is a select group of providers who have engineered their networks to meet the needs of the high-frequency trading community. GeoReach participants have engineered optimum paths from Switch and Data’s “Financial EcoCenters” to each of the regional liquidity providers to satisfy the requirements of the most latency-sensitive infrastructure.
“As a partner in our GeoReach program, Lexent’s network provides our customers with high-quality and resilient dark fiber network connectivity to a wide variety of customers in the financial services space,” says John Panzica, Switch and Data’s financial services practice VP.
GeoReach participants are a critical element of Switch and Data’s Financial EcoCenters, which provide mission-critical infrastructure to meet the security, volume and low-latency requirements of the electronic trading community.
Switch and Data’s EcoCenters aggregate an ecosystem of the pre- and post-trade service provider, buy-side and sell-side communities into Switch and Data sites located in the geographic center of the major liquidity providers in New York and Toronto.

Lexent Metro Connect, the leading provider of dark fiber networks in the New York metropolitan area, has become part of Switch and Data’s GeoReach program. Lexent Metro Connect has also completed its construction of a low-latency dark fiber network route to Switch and Data’s North Bergen site located at 5851 Westside Avenue in New Jersey.

Lexent provides dark fiber interconnectivity between Switch and Data’s North Bergen and 111 Eighth Avenue, New York, colocation sites and other leading New York Metro data centers and financial exchanges. This critical, low-latency interconnectivity provides high performance access for Switch and Data’s clients in both facilities.

Switch and Data’s GeoReach program is a select group of providers who have engineered their networks to meet the needs of the high-frequency trading community. GeoReach participants have engineered optimum paths from Switch and Data’s “Financial EcoCenters” to each of the regional liquidity providers to satisfy the requirements of the most latency-sensitive infrastructure.

“As a partner in our GeoReach program, Lexent’s network provides our customers with high-quality and resilient dark fiber network connectivity to a wide variety of customers in the financial services space,” says John Panzica, Switch and Data’s financial services practice VP.

GeoReach participants are a critical element of Switch and Data’s Financial EcoCenters, which provide mission-critical infrastructure to meet the security, volume and low-latency requirements of the electronic trading community.

Switch and Data’s EcoCenters aggregate an ecosystem of the pre- and post-trade service provider, buy-side and sell-side communities into Switch and Data sites located in the geographic center of the major liquidity providers in New York and Toronto.

By Gary Kim


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10G to the Desktop?

Thursday, January 28th, 2010
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There’s nothing like talking directly to service providers to learn how fast technology is advancing.  Take the topic of 10 Gbps Ethernet (10 GbE) connectivity for enterprises, for example.  With analysts reporting majority adoption of either Virtual Private LAN Services or IP VPNs some point this year, it’s easy to see that we’ve passed into mass adoption of packet-based WANs.

VPLS adoption

Many of us in the network equipment space would like to know when the need for speeds beyond GbE, the current connection of choice for large enterprise, will start to emerge for more than a handful of sites.   Companies don’t need 10x more bandwidth to move to a 10 GbE connection: the luxury of Ethernet is it’s granular rate-limiting flexibility.  Moving to a 10 GbE port really means having access to any speed from 1,000 – 10,000 Mbps, with the ability to scale up as need be.  More than likely if a customer is using GbE today, the fiber is already there.  So switching to 10 GbE media really means changing customer-premise (located) equipment (CPE) for the service provider to a switch or network interface device (NID) that can monitor and hand-off at this rate.

These aren’t the days of T1s, where you just keep adding another to get the capacity you need.  An enterprise could elect to bring in a second GbE line to scale capacity, but for nearly the same price they could run 2 Gbps over a single 10 GbE connection.  This approach gives them room to grow on-demand, and gives them options to use the additional capacity as required – for example, an enterprise could request additional best-effort bandwidth at a reduced price (EIR, or Excess Information Rate beyond their guaranteed throughput) to help handle bursting or peak traffic loads.

So when will this trend start to pick up?  Service providers give different answers depending on how you ask.  If I ask “When should we be ready with equipment to help you deliver and monitor 10 GbE to the enterprise?” they’ll answer, “Now.”  But if I ask them, “When and how many 10 GbE nodes would you actually buy?”, you tend to get more conservative answers.  Recently we did ask such a question during a customer webinar, where over 150 invited service providers were asked to complete a short survey on their plans for 10 GbE in the year ahead.

10G NIDs

In general, the 10 GbE need was stronger than expected, with just over half planning to deploy 10 GbE packet performance nodes next year.  When asked to estimate volume, quantities ranged from several sites to over 50 at a time.  It look like for edge networking 2010 might be remembered as 2010GbE.

Even if the economy might be slow, the network certainly won’t be if these operators do what they’re threatening to.


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