MOEX Sees New Network as Key to Asia Arbitrage Opportunities

The Moscow Exchange is hoping to expand its investor base—especially among firms in Asian countries looking for arbitrage trading opportunities between local contracts and those listed on the exchange—by enlisting Russian low-latency network provider Avelacom as its exclusive connectivity provider.

The exchange chose Avelacom to replace its previous network provider because it could offer lower-latency connectivity to a broader array of key exchanges—especially those in major Asian markets for the exchange, including exchanges in Shanghai and Mumbai, officials say.

“We hope to attract more clients, especially ones that are looking to deploy more global trading strategies and seek new opportunities outside of their home market,” says Igor Marich, MD of FX and money markets at the Moscow Exchange. “We offer products on more than 60 underlyings—futures and options on Brent and light sweet crude oil, gold, other precious and non-ferrous metals, Russian ruble/US dollar, US dollar/Indian rupee foreign exchange, global and Russian benchmarks—[as well as] indices and single stocks. All those assets can be used for arbitrage trading across APAC derivative markets in particular.”

Using Avelacom’s existing presence in key markets, the Moscow Exchange has established new points of presence (PoPs) in datacenters in Hong Kong, Singapore, Shanghai, Dubai, and Mumbai that will provide low-latency access to market data and FIX trading connectivity.

“Our PoPs in Shanghai, Mumbai, Hong Kong and Singapore are ranked the most important with the biggest growth potential. Avelacom’s infrastructure has a great presence across those markets. It was part of the deal that we exploit our existing PoPs—a ready-to-go infrastructure—rather than deploying new PoPs that could lead to increased costs,” says Alina Karpichenko, low-latency solutions manager for capital markets at Avelacom.

Avelacom’s network delivers roundtrip latency of 119 milliseconds (ms) between Moscow and Shanghai, and 138ms between Moscow and Mumbai. The cost of connecting to these Asian PoPs is around €2,000 per month, which Karpichenko says is less than half the price of deploying equivalent private infrastructure.

In addition, Avelacom has reduced latency between Moscow and London from 41ms to sub-36ms, while providing cost savings of up to 25%. For example, the monthly cost to access MOEX via a PoP in London or Frankfurt is €1,000, while the cost to access MOEX from a PoP in the CyrusOne datacenter in Aurora, Ill that hosts CME Group’s marketplaces is €1,100 per month.