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Fast, familiar and flexible access to growing markets
Table of Contents:
Introduction ..................................................................................... 2 Current Landscape and Trends ........................................................ 3 The Opportunity ............................................................................... 4 Overcoming the Barriers to Entry ...................................................... 5 Advanced Technology and Robust Support ....................................... 6 Comparison of Deployment Times..................................................... 7 Core Services ................................................................................... 7 Significant Advantages for Market Participants.................................. 9 Summary ........................................................................................10
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In an increasingly global world, with high frequency trading and colocation still holding a meaningful percentage of trading, what are the next steps for customers who want to look beyond the horizon? In this white paper, NYSE Technologies puts forward its vision for the capital markets community – by creating Global Liquidity Centers in financial hotspots to allow a broad spectrum of market participants to explore the great opportunities of the world’s fastest growing trading venues. With little capital expense and a minimal learning curve, firms can now trade in new markets using the same software they use right now in local markets. Requiring no long-term commitments, Global Liquidity Centers fuel your growth by reducing the cost, time, and expertise required for co-located trading infrastructure.
3 | Global Liquidity Centers
Current Landscape and Trends
“Over the past decade, financial institution operating models have radically changed. Organizations have become more operationally efficient and expanded globally, and the level of automation has been relentless. From mostly developing asset class and geographically siloed enterprise processing and trading solutions, institutions have migrated toward a customer-centric, distributionfocused philosophy, attempting to put as much technology within clients’ grasps as possible.”
- Larry Tabb, writing in Wall Street Tech, 9th Sept 2011
Sell-side firms are squeezed between the client demands to trade on more global exchanges and the substantial capital and human resources required to fulfill those demands. Many of the largest buy-side participants have accepted the limitations of accessing promising markets exclusively through their brokers. Those who venture forth find that infrastructure costs cut into trading profits. In an effort to meet the demand for a more affordable and flexible way to trade in proximity to global markets, NYSE Technologies is launching Global Liquidity Centers – a fully hosted trading infrastructure on servers in key data centers - on which customers can place their trading algorithms and other software. From there, they can receive market data from all local markets via hosted market data connectivity, and send orders back to those same markets. If this all sounds familiar, it’s because it is. Every Global Liquidity Center offers access to the exact same set of products and services NYSE Technologies customers already use in our Mahwah and Basildon Liquidity Centers. There is no technical learning curve to a new market. Once you’ve used one Global Liquidity Center, you can use them all. Perhaps most importantly, all Global Liquidity Centers are supported by the same teams that design and support the world’s largest trading platforms.
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While the major markets - such as the NYSE Euronext markets in New York and London - still garner a huge percentage of global trading volume, the rest of the world is rapidly catching up, providing outstanding new opportunities to find liquidity and deploy new trading strategies. Until now, however, it has been difficult to trade in proximity to these markets cost effectively without making long-term commitments... often a greater investment than volumes can justify.
Some less travelled markets are experiencing great growth…
50% 40% 30% 20% 10% 0
re o iag po il SE o o SE nt az xic To ro ga Sin
ng Ho ng
NA SD AQ
Source: Electronic Order Book Value (Jan 1 – Feb 28 2011/ 2010), World Federation of Exchanges
However, the absolute value is smaller.
5,000 4,000 3,000 2,000
720 158 241 52 21 10
Source: Electronic Order Book Value (Jan 1 - Feb 28 2011), World Federation of Exchanges
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Overcoming the Barriers to Entry
Many firms would like to explore the opportunities of proximity trading on fast growing global markets, but considerable barriers to entry stand in their way. NYSE Technologies Global Liquidity Centers overcome these barriers, providing both buy-side and sell-side participants with fast, affordable, and flexible market access.
Complications of Market Participation
Large initial commitments:
It typically requires an initial capital expense to set up a co-located infrastructure and operate it for a year.
Global Liquidty Center Solutions
Minimal initial commitments:
By eliminating the capital expense, reducing recurring expense, and providing flexibility of use, Global Liquidity Centers greatly mitigate the risks of entering a new market.
High fixed costs:
There are many expenses involved in the costs of staffing, supporting, and constantly upgrading your infrastructure cutting into trading profits.
Reduced operational costs:
Compared to deploying your own technology, a Liquidity Center typically reduces your costs by 30%, so a trading algorithm can make 30% less money and still be profitable.
Procurement and installation delays:
It can take up to six months to plan a deployment, contract space and circuits, purchase and ship equipment, and clear customs.
Global Liquidity Centers can have you deployed in approximately a month from contract signing.
Support and maintenance:
Electronic trading infrastructures are inherently complex. There are equipment and software upgrades, monitoring, staffing support, contracts, market data entitlements, etc. It can be difficult to find qualified staff, and your internal staff may lack capacity to take on new deployments.
Global Liquidity Centers are deployed and supported by the same team that builds and maintains the world’s largest markets. We keep your infrastructure up-to-date, operational, and secure.
Comparing the features, services, and costs of data centers in a given region can take considerable time and effort
Located at the best sites:
Global Liquidity Centers are in the best data centers in each region we enter. We provide colocation with exchanges while maintaining your ability to trade on multiple markets.
Lack of local knowledge:
Every market has its own regulations and tax regime, and it can be difficult to know what you don’t know e.g. the BM&F Bovespa equivalent of triple witching or the Russell rebalance.
NYSE Technologies partners with independent analysts to provides market research primers giving an overview of local market structures, tax issues, and regulations.
Lack of Flexibility:
Brokers offer some customers collocation services. However, our customers prefer a broker-neutral solution, preserving at least an aura of flexibility.
Broker access to prime sites
Our sites our broker neutral, so you can engage multiple brokers or simply swap. This may help contain operational risk and negotiate more favorable brokerage fees.
Technical learning curve:
It can take a considerable amount of time and effort to learn the ins and outs of new technology services for each of the markets you enter.
Familiar and consistent services:
Familiar services, consistent from market to market, eliminate the technical learning curve. In each Liquidity Center NYSE Technologies can roll-out the same technology services you may already use today: 1. SuperFeed 2. Cloud/Compute On Demand 3. RMG
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Advanced Technology and Robust Support
Our Global Liquidity Centers are concentrated versions of the Liquidity Centers in Mahwah, New Jersey and Basildon, U.K.; using the same equipment and support team. In many cases, the exchange uses the same technology - so the integration is even tighter.
Full resiliency 10 Gig Ethernet in the Liquidity Center State of the art multi-core servers for automated trading and up-to-date libraries for market data
Call your support contact for services in any of our Global Liquidity Centers. One point of contact. One team. One exacting set of standards Monitoring Problem resolution Change control Capacity planning
7 | Global Liquidity Centers
Comparison of Deployment Times
Global Liquidity Centers can be deployed three times faster…
Mo nt h1 Mo nt h2 Mo nt h3 Mo nt h4 Mo nt h5 Mo nt h6 Mo nt h7 Mo nt h8
DIY Design technical solution Determine support model Procurement Installation Testing Pilot
Liquidity hub Procurement Installation Testing Pilot
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NYSE Technologies services available in the Global Liquidity Center Sponsored access (RMG) 100 microseconds
Customer software Compute on Demand FIX Orders
Local Markets Customer software Colocation Service FIX Orders FIX Order Routing (Marketplace) Orders
Customer software Customer Data Center
MAMA Mkt Data
Hosted Real Time Market Data (Superfeed) 100 microseconds
Market Data Remote Markets
The Global Liquidity Centers are built using the exact same technology used to trade on the NYSE Euronext markets today, so there’s no need to start from scratch learning new technical nuances for each new venue whether it be TSX, Alpha, Pure, TSE, OSE, Chi-X Japan or HKEX. Services available in NYSE Technologies Global Liquidity Centers:
Compute on Demand (COD)
Compute on Demand offers dedicated, managed blades with pre-provisioned access to markets and application services. Windows and UNIX machines are available, both with local storage. Designed to host algorithms and supporting software, COD customers access their machines via SFTI to load various software and configurations. You can load software via file transfer, and configure and monitor via a TCP session or remote VPN. Customers are encouraged to take blades in multiple sites for resiliency.
Risk Management Gateway (RMG)
Risk Management Gateway offers a sponsored, risk-managed gateway for order flow. It gives broker-sponsored participants the connectivity and technology needed for high-performance, pre-trade risk-filtered access to trading venues. Sponsoring brokers receive a comprehensive picture of their clients’ risk profiles, and can control and monitor their clients’ risk limits via real-time, web-based GUIs or APIs. RMG already interfaces to NYSE and NASDAQ today handle heavy order flow, while adding only microseconds of latency.
SuperFeedTM is a fully managed, hosted market data feed service. It greatly simplifies the delivery of market data from global venues, reducing latency and decreasing costs. The customer is freed from buying and operating the extensive hardware, software, and networking required by an in-house market data infrastructure.
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NYSE Technologies Marketplace allows our global community of 1,200+ buy and sell side firms to send and receive trade information in real-time, with the connectivity model of their choice. Marketplace combines integration into all popular OMSs, fast on-boarding, and world-class support to simplify connection to 630 sell-side firms, exchanges, ECNs, and ATS venues globally. Marketplace handles all FIX versions and translation among them, while order routing enables customized FIX messaging, and support for all algorithms.
PTP for microsecond clock synchronization
In some data centers there is no ability to deploy a GPS antenna. Even where you can, do you really want to? We use highly accurate PTP within our Liquidity Centers for clock synchronization, and will soon be using GPS synchronization across Liquidity Centers wherever possible.
Significant advantages for all market participants
Global Liquidity Centers can help you meet client demands for low-latency access to deep pools of liquidity across multiple geographies and asset classes, all within a cost-effective, flexible trading infrastructure with managed risk parameters.
Tier 1 Broker-Dealers
Even the most sophisticated internal technology teams can struggle to deploy and maintain the infrastructure needed to meet the full spectrum of client demands on a global basis. Global Liquidity Centers take the struggle out of keeping pace with technology upgrades and support, and enable you to replace fixed overhead with a highly flexible and scalable solution. They allow you to explore and expand in global markets without incurring large CAPEX investments.
Tier 2 Broker-Dealers
Global Liquidity Centers allow Tier 2, regional sell-side broker-dealers to keep pace with larger institutions. Now you can easily sell new trading locations to your customers without enormous investment outlays.
Through Global Liquidity Centers, hedge funds and other institutional investors find a cost-effective, broker-neutral platform for trading in rapidly growing markets. You can explore new sources of liquidity and an expanded range of trading strategies without making expensive, long-term commitments to new markets.
Global Liquidity Centers provide high-frequency system traders with ultra-low latency access to the world’s fastest growing markets. Faster deployment and low initial costs allow traders to get in and out of markets with relative ease, and lower recurring costs make a broader range of algorithmic strategies profitable.
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Consistent, familiar, and cost-effective
NYSE Technologies’ Global Liquidity Centers are a response to customer requests for a fast, familiar, and cost-effective way of trading in markets worldwide: Minimal learning curve – The same technology you use to trade on all NYSE Euronext markets Rapid installation – From design to launch in approximately a month from contract signing. Easily scalable – Start with a single blade; expand into a large deployment Advanced technologies – High-performance technology that powers low-latency trading on major world markets World-class support –The same team that maintains the world’s largest markets With no capital costs, a short learning curve, and exceptional flexibility, these Global Liquidity Centers will make it economically feasible to dip your toe in a new market and see if you can make it work. If you like the results, expanding is as simple as calling your account representative. Using the same technologies in the same way, Global Liquidity Centers radically simplify complex global trading, delivering a vast new realm of profitable opportunity. For more information, contact email@example.com
About NYSE Technologies
A division of NYSE Euronext (NYX), NYSE Technologies provides broadly accessible, comprehensive connectivity and transaction capabilities, data and infrastructure services, and managed solutions for a range of customers requiring next-generation performance and expertise for mission critical and value-added trading services. NYSE Technologies offers a diverse array of products, services and solutions to: the Buy Side, including order routing, liquidity discovery and access to a community of over 630 Broker-Dealers and execution destinations globally; the Sell Side, including high performance, endto-end messaging software and innovative market data products delivered on the world’s largest, most reliable financial transaction network; and Market Venues and Exchanges, including multi-asset exchange platform services, managed services and expert consultancy. With offices across the U.S., Europe, and Asia, NYSE Technologies offers advanced integrated solutions for the global capital markets community, earning the ability to power trading operations for many of the world’s best financial institutions and exchanges. For additional information visit: http://nysetechnologies.nyx.com
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