Colt, a business communications and IT services provider, has launched two new trading networks in Europe, which it claims will operate at a significantly lower latency than other similar offerings.
By enhancing its FastNet Ultra portfolio, Colt's connectivity and proximity hosting infrastructure, the firm says it has achieved roundtrip times of 4.22 milliseconds between London and Frankfurt and 2.65 milliseconds between Paris and Brussels.
According to Tony Moulange, senior business development manager, Colt, the enhanced network will be most widely adopted for trading derivatives on Eurex, the Frankfurt-based derivatives exchange.
“The vast majority of liquidity on Eurex originates from London where the large investment banks are hungry for arbitrage opportunities between the contracts on offer here and their equivalents listed on the CME and NYSE Liffe,” Moulange told theTRADEnews.com. “We now have low-latency connections to all three of these venues to facilitate high-speed algorithmic trading strategies.”
Moulange said that the enhanced networks will be mostly used by proprietary traders at large investment banks and hedge funds that have the ability to leverage the infrastructure of their prime brokers.
“Our network works well with the strategies employed by high-frequency traders, but it is more about being able to reach liquidity ahead of other market participants,” he added.
The key to Colt's lower latency compared to its other competitors, such as BT's Radianz network or the recently unveiled Thomson Reuters Elektron network, claims Moulange, is the hardware supplied to Colt from Canadian-based technology firm Infinera, which enables data to be routed without having to boost the signal every few hundred kilometres, which can add latency.
Colt plans to develop similar trading routes between other market centres across the world in line with customer demand.