Colt Cuts Japan–Hong Kong Latency to Sub-41ms

UK-based network provider Colt Technology Services has reduced latency on its network between the Japan Exchange Group (JPX) and Hong Kong Exchanges and Clearing (HKEX) to around 40 milliseconds. 

The vendor has operated an ultra-low latency network between the two exchanges since 2010. Over that time, the route has undergone several optimizations to provide the fastest connectivity for high-frequency traders. 

James Hardcastle, capital markets director for Asia at Colt, says Colt guarantees latency of 40.86 milliseconds or less to its clients under its service-level agreement (SLA). “So we should be inside that, because obviously if we’re not, we’re in breach of the SLA, and therefore we have to give credit back,” he says. 

Colt sees increasing demand for its ultra-low latency routes. One of its most popular routes is between JPX and CME Group, while connectivity between each of those markets and the Singapore Exchange is also in high demand, Hardcastle says.

“Across all three of those exchanges, you have 24-hour trading. You’ve got the Nikkei 225 index options and index futures that you can trade. So you can build out a position on JPX, and when that closes, you can trade it on CME, and then vice versa when that closes. On JPX-SGX you can do real-time arbitraging,” he says, adding that the popularity of the JPX-HKEX route is likely a result of exchange-traded fund trading on HKEX. “So, the arbitrage there is you buy the ETF on HKEX, and then you trade the underlying out on JPX.”

Continuous Optimization

Colt is continuing to look at ways to optimize its routes, which it does either annually or bi-annually, implementing new technologies where it sees opportunities to make incremental latency reductions. “Where it meets the building, you can change the equipment that is running through, and you can change the cabling in the rise of the building, etcetera. Things on a short distance, sort of sub 100-150 meters, copper is faster than fiber. Not many people know that. So copper is actually faster than optical fiber, but only for short distances. It’s endless really, where you can tweak and shave bits, it’s just a question whether shaving a little bit is going to create a big enough difference to the world,” he says. 

Colt is also investing and expanding its routes and coverage areas. It announced a €500 million ($554 million) three-year global network investment plan in 2017—and spent €300 million ($332 million) of that in 2017 alone—before increasing that investment plan to €1 billion ($1.1 billion) in 2018. The vendor used the funds to enhance its network in Japan, Hong Kong, and Singapore, and to perform other network enhancements globally. 

Its most recent investment saw the completion of a fiber-densification project in and around the City of London, adding 110 kilometers of new fiber in the city. The project ran alongside the expansions of the Colt IQ Network in Eastern Europe, Dublin, and Berlin. These expansions will result in a new 7,000-kilometer network connecting more than 10 cities in Eastern Europe with more than 300 kilometers of fiber installed in the cities of London, Dublin, and Berlin.