Toronto Joins NYSE Technologies Liquidity Center Network

Eventually, NYSE Technologies, the technology and services arm of NYSE Euronext, wants its group of datacenters—which it calls its Liquidity Center Network—to extend into every major trading center on the globe. It already has a presence in seven cities with several more planned for the next two years, according to officials.

The latest Liquidity Center deployment is in Toronto, where NYSE Technologies opened two centers in December—one in the Q9 data center at 100 Wellington Street that hosts a number of Canadian alternative trading systems (ATSs), and another at TMX Group's Markham datacenter, which hosts the Toronto Stock Exchange (TSX). 

Since the merger of the TSX and the Montreal Exchange (MX), Toronto has become electronic trading center of Canada. The city experienced a 40 percent growth in trading activity in the last year. NYSE Technologies targeted Toronto for its wealth of energy and mining resources, and its proximity to New York, where the vendor is headquartered. The two locations see a significant amount of arbitrage trading.

"It's in our backyard," says Don Henderson, CTO of NYSE Technologies. "We're in the process of doing this around the globe, and this is the one we can use to create a blueprint that we can copy and paste wherever we go. Our goal for each one of these is to have a common architecture that has the same client interfaces for things like market data and order routing, so that when clients want to go from one market to another they're not rebuilding, redesigning, or building new interfaces. They're leveraging the open standards and normalized application programming interface (API) that we provide so they can easily get into those new markets to trade."

NYSE Technologies already has facilities in Chicago; Frankfurt; Tokyo; Basildon, UK; Weehawken, NJ; and Mahwah, NJ. A second Tokyo center is on tap for this year as one of three or four targeted sites. Other possibilities in the Asia-Pacific market, where the company's clients have requested centers, include Hong Kong, Shanghai, and Singapore. An additional three or four centers are scheduled for 2013, possibly in Latin America.

The NYSE Technologies datacenters provide proximity-hosted access to markets, as well as a base set of low-latency electronic trading infrastructure services. Other core services include Risk Management Gateway (RMG), a low-latency risk-managed access tool. There is also SuperFeed, a market data ticker plant and distribution system that blossomed out of NYSE's 2008 purchase of Wombat Financial Software. Henderson expects that later this year, the SuperFeed architecture will be able to analyze historical data as well as real-time data.

Also later this year, NYSE Technologies officials expect to announce a partnership that will aid it in developing smart order-routing technology as a core service.

"What we envision is making it a seamless, cost efficient architecture," Henderson says. "I'm never going to say we're going to be the cheapest in the industry because, frankly, that's not what these big banks need. They need infrastructure that is being constantly invested in."

The Bottom Line:
Although the Toronto center experienced a delayed start—its launch was prematurely announced in April—Canadian traders will be happy to finally have it. With Canadian trading activity increasing, it is a good location for NYSE Technologies to complete its global datacenter roadmap. The company would be wise to look at São Paulo Sao and Singapore in the near future.

Ultimately, if it achieves its goal of establishing a presence in every major trading center in the world, it will benefit global investors, who will be able to strike large-scale agreements for plugging into NYSE's Secure Financial Transaction Infrastructure (SFTI) network.

However, NYSE Technologies will need to overcome concerns about vendor lock-in where firms find themselves at the mercy of vendor's pricing schedule without a reasonable alternative.