Proximity Hosting is not enough for Low Latentcy

Proximity Hosting is only taking you half the way there

Zero latency is the optimal trading speed that all firms hope to achieve at some point. But until that can become a reality, there is a race to keep reducing latency from all aspects of the trading process. From the server to the messaging to the sending and receiving of data, each piece must be optimized to reach the goal of zero latency. There are many avenues companies are looking at to reduce variables and risk to latency - one of those is proximity hosting.

There are data centers where the trader can actually collocate with the exchanges. For example, in Weehawken, NJ there is a data center that houses five major exchanges including: the New York Stock Exchange, Philadelphia Stock Exchange, and BATS Trading. This is a way to ensure there is almost zero latency built into the trade to those exchanges. But it is not the complete puzzle. Even with proximity hosting to collocate within a data center that houses exchanges there are still external servers that play a role in the execution of the trade. These are the data feeds, the platforms, your proprietary content, and the messaging. Even the data centers that host the exchange as a simple cross connect, are rarely the only exchange a firm is trading on. So how do you close the gap?

While a firm may be trading a particular asset class and the majority of trades may be directed toward a single venue, the volumes and price-points on related exchanges play critical roles in execution decisions. This means latency must be minimized from all data sources, not just the venue the majority of trades are placed on. For instance, having the lowest latency on venue A, but being significantly behind the market on venue B or C could have disastrous impact on success of a trade decision. It's important then, to reach a delicate balance between the lowest latencies on all data sources and execution venues.

Where milliseconds and microseconds make a difference to the success of a trade strategy, the idea of Central Proximity hosting is to find locations that are central to most of the destination you need to access. There are a number of hosting locations within the NJ/NY trading area: Clifton, North Bergen, and Weehawken, NJ just to name a few that provide central proximity hosting. Central Proximity Hosting enables firms to locate within a few miles of all the locations and data a trade strategy needs for successful execution. So that makes up half of the picture - how do you complete the race to speed-of-light transport?

The network provider does the rest. A Carrier is a good solution for the transport of data when latency and performance are important, but not critical. When latency reaches a level that's critical to your success and your strategic advantage, you need a more agnostic approach to finding the best network. In working with each Carrier, they will provide you their "on net" best solutions between locations. This approach is not always the best solution for your specific needs. And it is here that a network integrator offers you a measurable advantage comes into play.

The network provider that you partner with must be able to provide the lowest latency solutions for the metro ring and the longhaul. The network integrator you work with should be Carrier Agnostic, to ensure you are getting the optimal solution for your needs and not a solution based on the relationship an integrator has with a Carrier. Some integrators, like CFN Services, can even go a step further. Beyond optimal solution recommendations for your specific strategy and requirements, they can also create new routes specific to your priorities. An integrator like CFN Services can actually utilize optimal spans of available fiber to create new fiber routes that do not exist along any single Carrier.

In the race to Alpha, the combination of Central Proximity Hosting coupled with the Low Latency Transport is key to your success.