How much is a millisecond worth? In the world of finance, it could be millions.
When it comes to financial transactions, every millisecond counts. In order to remain competitive and profitable, financial institutions depend on lightning-fast, errorless data, in vast quantities. Money markets fluctuate without warning and decisions controlling billions of dollars are made multiple times per day. The data these decisions are based on cannot be old—even milliseconds old. Stock exchanges and financial institutions therefore demand a virtually “zero-latency” network.
However, ensuring zero latency in finance is becoming more and more difficult. Financial transactions are now calculated and executed upon with increasingly complex technologies that require immense processing power, particularly high-frequency trading and program trading.
High tech in finance
High-frequency trading uses powerful high-performance computing to conduct a large number of transactions in fractions of a second. Deep algorithms analyze multiple markets at once, and execute orders based on incredibly fast calculations, capitalizing on minute shifts in market activity. The faster the execution speed, the more profitable the transactions are.
Program trading (also referred to as portfolio trading or basket trading) uses algorithms to frequently trade groups of 15 or more stocks with a value of $1 million or higher. While the algorithms are programmed and monitored by humans, the trades are conducted automatically by machine. As of 2018, program trading accounted for 50% to 60% of all stock market trades placed during a typical trading day, with that number rising to over 90% during periods of extreme volatility.
These types of high-tech financial instruments are pushing the finance industry to provide even faster data and more robust processing power than ever imagined. Analyzing market developments—and executing upon them even a millisecond sooner than other traders—gives financial firms a distinct competitive advantage. Financial companies are gaining these precious milliseconds by directly connecting to colocation data centers.
Connect locally, profit globally
Colocation data centers, located geographically close to users, provide the near-zero latency financial companies require, as well as direct interconnection to a variety of network, cloud and IT service providers. By connecting geographically close to their location, financial companies can minimize latency as much as possible by reducing the distance data has to travel and enabling data processing at the edge—the periphery of the network. Additionally, colocation allows financial firms to take advantage of direct on-ramps to nearly any cloud provider they need. This enables optimal scalability and flexibility while supporting cost-effective, sustainable growth.
The best local solution
Netrality’s interconnected data centers in Chicago, Philadelphia, Houston, Kansas City, and St. Louis are all strategically located in or next to their city’s financial district. In addition to near-zero latency from connecting just down the block, Netrality provides direct on-ramps to leading cloud providers, including AWS, Oracle, IBM, Microsoft, Google, and Alibaba. Our facilities are regularly audited for adherence to FISMA High, ISO 27001, PCI and SOC 2 Type II standards, and provide externally validated physical protection and adherence to the latest cybersecurity best practices.
With Netrality, financial firms can be confident their critical infrastructure and private data is secure and available with microsecond latency. Our flexible, scalable and reliable environments are designed to match your specific needs and eliminate any worries of downtime, disruption, availability, or security. Contact us for more information.