The global consolidation of the highspeed data business might not be happening in nanoseconds yet, but its pace does seem to be quickening.
On Jan. 8, GTT Communications, a rapidly growing telecom company based in Northern Virginia, announced its acquisition of Custom Connect, an Amsterdam-headquartered provider of low latency IP-based network connectivity in Europe and the Middle East.
Executives at GTT noted in a release that the deal extends the reach of its Tier 1 IP backbone in Europe and the Middle East, expands GTT’s sales presence in the Benelux region, and extends its roster of multinational clients with strategic accounts. GTT provides connectivity to more than 130 exchanges on six continents and counts six of the top 10 investment banks as customers.
With Brexit looming on the horizon, the jewel in the crown of the deal may be Custom Connect’s ultra-low latency service between Frankfurt and London, New York and Chicago. Numerous banks are preparing to move staff from London to Frankfurt, and the city is also the home of Deutsche Boerse and its subsidiaries, Eurex and Eurex Clearing.
Microwave Connectivity in Demand
GTT’s recent deals included the $590 million acquisition of Hibernia Networks in 2016, which included a transatlantic submarine cable that offers ultra-low latency connectivity between financial centers in New York and London, and the $37.5 million acquisition of Perseus in 2017, which operated a microwave-based network used by banks, hedge funds and trading firms.
On Jan. 9, BSO Networks, a London-based firm, announced that it had acquired Apsara Networks, a major supplier of wireless connectivity to financial markets. Although BSO already manages a 96,000-mile network of fiberoptic submarine cable, Michael Ourabah, the company’s chief executive officer, explained that there were several advantages to the acquisition. One was Apsara’s wireless microwave network, which connects some of the world’s biggest markets, including a New Jersey route that ties into Nasdaq, NYSE, and BATS.
“A route including some of the world’s most popular exchanges was clearly a highly attractive element of the deal. However, there are other important factors behind the purchase, including already having both an on-the-ground team and electronic trading clients in the New Jersey area,” said Ourabah.
Ourabah sees microwaves as a key tool for firms that want to further accelerate their trading speed. “For firms running high-speed trading strategies, sending data through the air via wireless microwave signals can trim a further fraction of a second off trading times.”
The Intercontinental Exchange is also trying to step up its high-speed game. In September, the company announced that it planned to collaborate with Go West, a network provider backed by a consortium of major trading firms, to offer its customers the fastest travel time between Chicago and Tokyo. The connection relies a system of wireless towers, fiber-optic lines, and submarine cables. This came on top of ICE’s May 2017 acquisition of the Atrium wireless network from Canada’s TMX, which connected New Jersey, Chicago and Toronto.
In the meantime, other networks are breaking speed records. Colt Technology Services announced in December that it had cut the latency on the Tokyo to London leg of its Global Colt IQ Network to just 159 milliseconds. The gains were part of a €200 million investment by the London-headquartered firm to upgrade the network’s connections with over 850 data centers and 25,600 buildings around the world.
Next-Gen Data Monitoring
The pipes are not the only part of high-speed trading that is getting faster. In December, Napatech, a Copenhagen-based provider of reconfigurable computing platforms, announced that it had successfully integrated its hardware and software with MayStreet’s data monitoring tools to serve an undisclosed proprietary trading firm.
The joint solution combines Napatech’s FPGA-based SmartNIC and Pandion recording software with MayStreet’s high-precision packet data solutions. The solution made it possible to provide ultra-high-quality network-level data capture for research data set generation, real time risk monitoring, latency measurement, and compliance.
In a release, Napatech executives said the joint offering makes it possible for the customer to roll out a precise data capture solution without the need to replace existing systems, reducing the time to roll out by a factor of five. The customer can also collect data to meet a range of requirements quickly and cost-effectively. Finally, they added, Napatech’s products can be deployed on an open server platform and integrated with the cloud, reducing storage costs and providing shorter access times to historic data sets.
Their combined solution is part of a larger generational shift in the online trading world from data monitoring with an expensive proprietary appliances toward more flexible options, according to Patrick Flannery, CEO of New York-based MayStreet.
“You can build a solution that is more targeted, more cost-effective, and offers better functionality,” he said.