Warsaw Exchange Relaunches Co-Lo to Grow Algo, International Participation

The Warsaw Stock Exchange originally launched the co-location service two years ago, and has since extended its scope to include additional services, such as "remote hands" support, greater power availability and PTP time synchronization, making the service more attractive to algorithmic traders.

A WSE spokesperson says the goal of relaunching the co-location service was to boost liquidity rather than to make money from sale of infrastructure and related services, adding that the exchange also has several incentives underway to boost trading activity, including the High-Volume Funds scheme, which offers lower trading fees to investment funds with high-portfolio velocities, and is also working on another new scheme to support participants keen to add liquidity to the order book, though it is too early to provide further details of this initiative. The spokesperson says the exchange has seen demand for these incentives from clients who are not yet trading from the co-location site but wish to, which is why WSE decided to relaunch the service with improved facilities.

Announcing the relaunch, exchange officials cited Polish brokerage firm Erste Securities Polska as the first exchange member to go live in its co-location facility, to offer its clients access to the exchange's UTP trading system.

A spokesperson says the exchange is in the process of installing other customers, with more waiting. "Generally our customers will be a mix of both foreign and Polish entities.... We also expect market data distributors to host their infrastructure in our co-location [facility]," the spokesperson says, adding that different client types all pay the same fees-and while those who do not migrate to the co-lo will continue to receive trading rebates, co-lo customers will have access to different incentive schemes.

By using the co-location service and installing hardware and software directly next to the UTP matching engine, exchange members, data vendors and other exchange clients can ensure the lowest-latency communication of not more than 500 microseconds to UTP.

In addition, the exchange says it now offers a full suite of market data solutions to attract algorithmic traders, including market data for non-display usage, free historical tick data, six months of free real-time data for testing, which is available directly from the exchange or via data vendors, and six months of free real-time data for trading. Clients can also choose to terminate their contracts after the first 6 months without incurring a fee.

In other planned future initiatives, WSE plans to set up a point of presence in London and upgrade the co-location facility to further reduce latency, depending on client demand, as well as introducing a smart beta index as the exchange continues its efforts to attract international traders.