Companies should look to avoid building and maintaining the underlying components of data centre infrastructure themselves. Directly leasing racks in an exchange colocation facility or buying expensive cross connects to the exchange switches for trading access, is not the core competency of most companies and should be left to expert partners. For example, for financial traders the goal is to be able to tap into the data centre network wherever traders want to trade: be that London, New York or Hong Kong or any other global financial centre.
Traders are a good example when considering the effects of digital transformation in data centres, as they need fast, reliable connectivity and market data feeds to drive their trading. Ultra-low latency trading is vital for algorithmic trading and trade execution speed is critical to ensure the best market prices are capitalised upon. The best low latency strategies depend on powerful servers housed close to exchange matching engines within data centres. Technology providers specialise in building shared networks and colocation footprints, offering firms access to market data and trading connectivity on-demand. This shared infrastructure service access to expertise and the latest technology, comes at a fraction of the cost of companies doing it themselves.
Speed within the data centre matters - processing close to the source of the input data provides the lowest possible latency between input and response. TNS’ ultra-low latency Layer 1 technology was the first of its kind to be deployed globally, delivering direct exchange connectivity in as little as 5 to 85 nanoseconds - impressive when you consider that the human eye takes 400 nanoseconds to blink.
Competitive advantage comes from having the best communication links into the colocation facility, to ensure controlled and coordinated activity between different data centre locations and markets. In fact, a complete solution must consider all the components that support a strategy in fine detail. This requires highly specialised knowledge and engineering capabilities, including the specifics of each data centre venue and data feed. It is working with an expert partner that keeps such knowledge and capability at its sharpest, providing an edge.
The cloud is rapidly becoming the go-to for FinTech start-ups, driving and supporting innovation on electronically traded markets. Traditional financial trading firms, from exchanges and data vendors, to brokers, hedge funds, and even proprietary trading firms, are rapidly embracing cloud computing, but how effective is it for high-performance execution?
Firstly, firms need a clear strategy for cloud implementation and the right people, with the right skills to facilitate an effective transition. The cloud can be cost-effective for storing data, but taking data out is expensive. Many customers look at the cloud as something that makes business simpler and lowers costs, but firms still need to understand how to operate in a business-as-usual capacity, while simultaneously adopting cloud services where appropriate. If this is not a core competency, valuable time and resources will be used in-house trying to figure it all out.
Public cloud services are great for big data analysis and help financial firms store, move, and manage large amounts of data, allowing them to make more informed trading decisions through effective data analysis. It is also good for transferring large volumes of data between datacentres, like London and New York, and can support adherence to different regulatory requirements, for example, by enabling real-time monitoring of activity. The nature of cloud-delivered services also enables ‘dial-up’ resource on demand, to innovate and pivot to a new initiative when needed, while creating alternative options for ensuring operational resilience.
The cloud is not one general concept; there are different factors to consider, especially geography. Different providers have physical locations from where their cloud solution operates, so understanding that there is a geographic element to any cloud offering is fundamental. Most trading strategies require a highly resilient and scalable infrastructure. Many factors can affect low latency trading, especially hardware location, the number of network hops, deterministic network latency, the hardware specification, and the resiliency of an infrastructure’s architecture, including both the scale and power of network connectivity.
Large scale public cloud providers may currently struggle to accommodate the particular needs of low-latency electronic trading and co-located infrastructure required by electronic traders. So, typically traders have used the cloud for less latency-sensitive purposes, like risk management, data storage, development work and modelling new strategies.
TNS Cloud – Server Management combines the company’s Dedicated Server hosting capabilities with hands-on server management. This end-to-end offering helps to dramatically reduce clients’ data centre complexity and costs, allowing firms to focus their human resources on mission-critical business goals and go-to-market opportunities.
“Until now, trading organisations often outsourced cloud data center services, but still had to manage their own server resources. With this new Server Management, paired with TNS’ established co-location capabilities, we’re reducing complexity by providing both infrastructure and end-to-end server management.” Jeff Mezger, Vice President of Product Management at TNS.
However, companies need to be strategic in their approach to digital transformation in the data centre. They need to consider working with experts as this will ensure that, as technology evolves, today's choices remain appropriate and adaptable to a dynamic future.
By Jeff Mezger, Vice President of Product Management at TNS
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