IEX Exchange Continues Market Democratization Quest, Adds Real Time Volumes App

A month before launching, the IEX Exchange is continuing its marketing campaign effort.

After numerous challenges which have been set up by the traditional industry for the alternative IEX Exchange, the company is well on its way to roll out later this summer. With merely a month separating the company from the official launch of the service, a marketing campaign is starting to hit the wires.

The company has made available via its YouTube channel a ‘Product & Philosophy’ video which elaborates on the main benefits that the company is aiming to bring to the market. With the face of one of the co-founders of the IEX Exchange, Brad Katsuyama becoming known industry-wide after the publication of the “Flash Boys” book by Michael Lewis, the company is now waiting for D-Day.

https://youtu.be/vD8yavwEBcA

Starting from the 2nd of September the IEX is set to become the 13th regulated exchange in the U.S. The company however is very different to its peers. The co-founders of the firm have been aiming to democratize market access for traders that are being front run by high-frequency trading (HFT) shops.

A number of brokerages in the retail industry announced in the aftermath of the publication of “Flash Boys” that they will be routing orders to the alternative trading system (ATS) which IEX is still at present. The official rollout of the exchange is going to gradually occur as the company tests its services.

At the heart of the offering is a speed bump that is placed in front of the matching engine of the exchange. The 38-mile coil of optical fiber which is located at the entry point to the unit is adding a round-trip delay of 0.0007 seconds. The company has managed to therefore prevent high-frequency trading (HFT) companies from front running other traders with slower connections.

1

Screenshot from the IEX app, displaying trading volumes in real time

Last week the company launched its new app, introducing the first mobile application with similar functionality. Anyone who installed the iOS and Android solution has real-time view of the U.S. stock market with not only the volumes transacted on the exchange itself, but a broad view of the U.S. stock market. BATS Global Markets has been providing such information for over eight years now on its website.

The app is available via Apple’s App Store and Google Play and is currently displaying information from the IEX alternative trading system.

2

Screenshot from the IEX Exchange app displaying trading volumes at all major trading venues

Article and media originally published by Victor Golovtchenko at financemagnates.com


Market Connectivity as a Service?

Lucera Financial Infrastructure and Perseus have teamed to create an on-demand Software Defined Network that allows financial traders to tap into market connectivity on an as-needed basis.

Dr. Jock Percy, Perseus Telecom

Dr. Jock Percy, Perseus Telecom

“You don’t need to own to infrastructure or the heavy assets, now you can buy it by the drink,” Perseus CEO Jock Percy told Markets Media. “This is the ‘uberization’ of capital markets connectivity,” he said, referring to the ubiquitous transportation network.

Using the network’s Software as a Service (SaaS) model, Percy said once a customer is on-boarded, he or she can log on via a secure-access portal and connect as they wish, 24 hours a day 7 days a week. This contrasts with legacy connectivity, which entails procuring, setting up and plugging in racks, servers and other physical equipment.

Billed as the first on-demand SDN exclusively for the capital markets industry, the network provides traders with cross-connection points encompassing more than 246 counterparties and 53 co-location centers across 24 cities, 15 countries and six continents. It combines Perseus’s low-latency, global, fiber network with Lucera’s SDN, compacting go-to-market network implementation cycles to no more than two days, or 45 times faster than the industry standard of 90 days.

“Forget about dealing with bandwidth and expensive hardware – a thing of the past,” Lucera CEO Jacob Loveless said in a release. “By creating the world’s largest SDN and devoting it exclusively to the financial markets, we’re game-changing the culture of connectivity that the industry hasn’t seen since the extranet arrived on The Street.”

Jake Loveless, Lucera

Jake Loveless, Lucera

“Perseus is the ideal partner to make this happen with their unrivaled speed and Points of Presence touching every major financial center across the developed and emerging world,” Loveless continued. “By being faster and more flexible than traditional service providers, SDNs now allow traders to connect to new markets on a customized, pay-as-you go basis.”

 

 

Originally published by  at Markets Media.


Inside the Nondescript Building where trillions trade each day

Inside the Nondescript Building where trillions trade each day.

Equinix's NY4 data center hosts 49 exchanges among the customers that have set up servers in the Secaucus, New Jersey, facility.

Six miles northwest of the New York Stock Exchange as the microwave flies, across the Hudson River and within earshot of Interstate 95, is a building with no name. Only three numbers mark its address, and, like much of its surroundings, it’s nondescript, encircled by windblown trash and lonely semitrailers waiting to be hauled away somewhere. It’s a part of New Jersey that’s, well, ugly.

It’s also a critical node in the U.S. financial system: The 49 different exchanges that lease space at this data center sent a record 9.6 million messages per second through its fiber-optic cables in February. Every day, electronic trades representing trillions of dollars’ worth of equities, derivatives, currencies, and fixed-income assets pass under this roof. This is NY4. This is where Wall Street actually transacts.

Servers in cages at NY4
Servers in cages at NY4. Photographer: Christopher Payne

It’s just one of the crown jewels ofEquinix, the $22.2 billion company that’s quietly grown into the world’s largest owner of interconnected data centers. To give you an idea of Equinix’s lead in the space, you would have to add up the market value of its five closest U.S. competitors to roughly equal its market cap, according to data compiled by Bloomberg.

Equinix pitches its centers as more than just storage space for servers. Its clients pay in part because of who else is there. That includes the Chicago Board Options Exchange, Bats, ICAP, Nasdaq, the NYSE, and Bloomberg LP, the parent company of Bloomberg News. IEX Group, the firm that starred in Michael Lewis’s 2014 book Flash Boys, stashes a key piece of its hardware in one of Equinix’s New Jersey data centers: a coil of fiber-optic cable that slows orders down by a fraction of a second. And those firms are just from the handful of financial industry customers Equinix discloses. It connects more than 6,300 businesses to their customers, and most of those firms don’t want it known that they lease one of NY4’s metal cages, which are identified only by numbers, not names.

Equinix’s nonfinancial clients, meanwhile, include some of the Internet’s biggest names: Amazon.com, AT&T, China Mobile, Comcast, Facebook, Hulu, LinkedIn, Microsoft, Netflix, Pandora, and Verizon. Much of the Internet is literally run through the nondescript buildings Equinix has scattered around the world. “They’re a crucial component of how the cloud works,” says Colby Synesael, an analyst at Cowen & Co. who covers Equinix. “It’s where the Internet lives.”

The security at NY4 bears this out. To get from the parking lot to a spot where you could touch one of the servers you’d have to go through five checkpoints. One of them is a so-called man trap with two automatic steel doors that never open at the same time. Your palm print is required twice in addition to your PIN code. A wall of video monitors captures every nook and cranny of the 338,000-square-foot building.

Once you’re in, the space is enveloped by a rush of white noise from the thousands of computer fans whirring away to keep the servers cool. To help maintain the temperature, the ceiling is 45 feet high, roughly four stories up. It’s barely visible—not just because of its height, but also thanks to all of the suspended trays of cables and cooling ducts running overhead. All this goes toward one statistic: Equinix says in its annual filing that it kept its facilities up and running 99.9999 percent of the time in 2015.

The 12 air-handling units in NY4 move cold air via overhead ducts.
The 12 air-handling units in NY4 move cold air via overhead ducts. Photographer: Christopher Payne.
They’re big on backups. In case of a power failure, NY4’s uninterrupted power supply room has 5,600 batteries on standby to provide eight minutes of electricity while the generators rev to life. Should the air conditioning fail and risk the servers overheating, there are three 150,000-gallon tanks filled with water chilled to 45F. Running that cold water through pipes would give NY4 staff 20 minutes to get the AC fixed. Oh, and the generators: 18 of them, each the size of a locomotive engine and able to crank out 2.5 megawatts of power. Equinix keeps 180,000 gallons of diesel fuel on-site to run them. In terms of footprint, NY4 is roughly the same size as a Manhattan block. If you want to look out the window, too bad. There isn’t one.
There’s a slick appearance to it all, from the red-lit foyer to the metal all around and the blue lights that shine from above. This last feature comes in handy at night for security purposes, but it’s also got an aesthetic touch to it. “When everything is dark and you only have these blue lights, it looks really cool,” says Michael Poleshuk, senior director of operations for Equinix in the northeast region, as he leads a tour.
Another reason the location is important to Wall Street is because NY4 is only one part of Equinix’s Secaucus, N.J., campus. The company has spent the last 20 years growing and consolidating the industry into its own spider web of interconnected data centers from Frankfurt to Tokyo to London to Rio de Janeiro to Sydney. This is the company that controls a significant part of modern finance: the sites where you plug in the actual computers that fuel today’s hyperfast and hyperconnected electronic trading.
“I call them the 800-pound gorilla of the data services market,” says Inder Singh, an analyst at SunTrust Robinson Humphrey. “I see these guys as a key bridge between customers and suppliers.”
The neutrality Equinix has established by not competing with its customers is also important, Singh says. “It is the Switzerland of data center players,” he says. That has a downside, though. “Equinix definitely leaves some money on the table. But they would probably be losing some of their coveted customers.”

Equinix provides only “dark fiber”; it doesn’t move data itself. That’s created opportunities for other companies. A startup called Lucera is one of them. The company operates something like a telecom within the data center by using software to interconnect the banks, exchanges, and investment firms that have servers at NY4.

“If Goldman Sachs wants to connect to 100 people, they just run one cable to us,” says Jacob Loveless, Lucera’s co-founder and chief executive officer. In turn, that one cable from a firm can then connect the client to any of the other 52 data centers around the world where Lucera operates.

The larger idea Loveless and his partner Peter Durkan hit on is moving Wall Street onto the cloud with shared infrastructure. After 10 years at Cantor Fitzgerald, where he was the firm’s head of high-frequency trading, Loveless realized there were too many trades out in the world that were great ideas but impractical: Implementing them would take six months and $500,000 because of the connections that needed to be made to another bank or investor or exchange that might be halfway around the world.

It would take a bank about three months to create a new connection to another bank if it did it on its own, Loveless says. Lucera’s fastest time to connect two of its users is eight seconds. That’s because the company is software-based and relies on hard-wired connections already created by Equinix. Lucera’s mean connection time is only two hours, Loveless says.

Standby power comes from 18 generators that can crank out 2.5 megawatts each
Standby power comes from 18 generators that can crank out 2.5 megawatts each. Photographer: Christopher Payne

NY4 and other data centers like it make this a reality, but it wasn’t always this way. At the dawn of electronic trading in the 1980s, major banks such as Goldman Sachs or Bank of America had to lay wire and cable to create their own networks to connect to customers. If you laid one bank network atop the other, they would have all been basically the same, Loveless explains, which is another way of saying it was hugely inefficient. Then in 2000, a company called Radianz set out to create a global network that promised access to the major financial institutions through a single connection.

It worked. British Telecom bought Radianz in 2005 for about $130 million. Lucera, which got its start in 2013, is now a sort of second-generation Radianz as it offers to handle the complicated interconnections within a data center like NY4 for its clients.

“If I’m a customer and I want to connect to 270 companies, I can either run 540 connections out of my own cage or they can run a pair to us and we’ll run the rest,” says Michael Badrov, global head of operations for Lucera. As he spoke in the firm’s cage at NY4, three workers were busy doubling Lucera’s capacity to take on more customers.

On the roof of NY4 on a rainy February morning, the skyscrapers of Manhattan could just be seen to the east. To the west, planes lined up to land at Newark airport. Microwave antennas that look like satellite-TV receivers are pointed toward Chicago, Newark, and north of the city where the signal can get hooked into the fiber-optic cable that ends in London. That’s where Equinix’s LD4 center is located.

This global network of densely packed data centers is now the reason you can trade a stock on your smartphone in a way that was unimaginable 10 years ago. The six or seven intermediaries needed—AT&T, your brokerage, the NYSE, and so forth—are all housed under Equinix’s enormous roof.

John Knuff, Equinix’s general manager for financial services, looks at this dense cohabitation and sees the future. “I always say, keep your customers close,” he says. “But keep your vendors even closer.”

Originally published on Bloomberg by Matthew Leising and Annie Massa.