Going Green

As financial firms around the globe rely more heavily on algorithms and black-box trading to execute trades in milliseconds, the demand for processing power is exploding.

There are two trends at work, says Bill Mew, UK advocacy and communications manager for IBM's financial services sector. "On the one hand, trading banks can't afford to miss the boat on algorithmic trading and they are requiring more and more horsepower to do it," he says. "On the other hand, power consumption is going through the roof."

Energy efficiency is not just an environmental issue; it is becoming a serious factor affecting the bottom line. Mew says some firms are spending more on energy bills than on staff. A recent study conducted by consultancy Broadgroup on the energy crisis in UK datacenters revealed that energy costs are set to double over the next five years. Governments and even energy companies are encouraging companies to go green. New York state hands out tax credits to companies with "green buildings" as an incentive to reduce emissions, while California's utilities company, Pacific Gas and Electric, offers rebates to customers on their energy bills when they purchase energy-efficient servers.

Gone are the days when being green and remaining competitive were mutually exclusive concepts.

In fact, more firms, such as Wachovia, are looking at ways to reduce their environmental footprint and save on energy costs. As part of its environmental strategy, Wachovia aims to reduce its carbon dioxide emissions by 10 percent by 2010. This represents a huge challenge for the investment bank, which has more than 40 million square feet of real estate to manage. The bank is focusing first on replacing older machinery, such as air conditioning, heating and ventilation systems, as it comes up for renovation, says Patrick Mumford, head of the environmental affairs unit at Wachovia.

In addition to refurbishing older properties, Wachovia is in the process of constructing a new "green" facility in Charlotte, North Carolina, the home of its corporate headquarters. The 46-story office building will occupy 1.2 million square feet and will meet gold level Leadership in Energy and Environmental Design (LEED) certification standards, according to Mumford. The new building will feature a number of novel ways to conserve energy, such as sensors that dim the lights when natural light is strong enough, and a "green" roof with plants on top to absorb the sun's rays and prevent the trading room below from baking in heat. Motion-activated electronic bathroom faucets prevent water from being wasted, and in the spirit of recycling, the used water is then pumped into the air cooling systems.

In terms of trading technology, firms have already done much to reduce their power requirements. In the past, dealing room CRT screens presented a serious issue, but the majority of these have been replaced by flat screens that require less power, says Paul Pickup, strategic IT consultant at analyst firm Trading Technology. "Not only do these screens consume far less power, but more importantly, they produce less heat. In dealing rooms, you require quite zealous air conditioning to counter the banks of screens, and in [one securities firm] we used to have monitors bursting into flames on a regular basis," he says. Disposing of used and outdated equipment is a major environmental issue, but according to Dave Douglas, vice president of eco responsibility at Sun Microsystems, it is now possible to recycle as much as 95 percent of hardware material that is thrown out.

Trading floors themselves are much cooler and more energy efficient as PCs have been replaced by racks of blade servers in the datacenter. Today's blade servers are smaller, more efficient, and use less power for higher performance, but Pickup says that with ever-increasing demand for technology, datacenters actually remain about the same size.

A number of features that were originally developed for laptops are moving into the server domain, according to Charles Smith, author of Building a Trading Floor and director of Oaksys Tech in London. More and more firms are using racks of blade servers and the power consumption varies widely depending on process load, he says. For example, they can enter "sleep" mode when they are idle and spring back to life when the traders return to their desks.

Keeping datacenters from boiling over is one of the biggest challenges and drains on energy budgets, and Mew says the engineers "are going have to find more and more clever ways to cope with this issue." One innovation is IBM's CoolBlue technology, which harks back to the days when water was used to cool mainframes. A heat exchanger is built into the rear door of the equipment cabinet and is fed chilled water. IBM says that because water can carry 3,500 times more heat than air can carry, it can reduce cooling power needs by 70 percent without requiring extra fans. At an IBM facility in Switzerland, the warm water coming out of the datacenter is then used to heat the rest of the building.

Some companies save on power by outsourcing their computing to third-party providers. BNP Paribas uses a hosted blade solution from IBM for all of its derivatives trading, reducing the amount of heavy-duty heat-producing hardware it needs to have on-site. IBM provides supercomputing power through its new London Deep Computing Capacity on Demand (DCCOD) center to support BNP's fast-expanding derivatives operations. As latency becomes more critical, Mew says the bank also benefits from the datacenter's proximity to the London Stock Exchange. Similar utility services are provided by Sun Microsystems and Hewlett Packard.

For those who like to manage their servers on their own, Sun Microsystems is developing an alternative solution to the traditional datacenter, to be launched later this year. Project Black Box is a virtualized datacenter housed in a shipping container, and requires far less energy to cool, thanks to its compact design and integrated cooling system, says Douglas. Eight racks with 42 19-inch server units will be able to house up to 250 servers plus some networking or storage, or 1.5 petabytes of storage. The challenge for firms seeking this type of solution will be where to house these datacenters, as most large financial institutions are located in heavily built-up cities like New York and London. Real estate may be cheaper in a New Jersey warehouse, but the added distance can mean added latency.

Whatever technological advances are made, however, the need for redundancy represents a major challenge to going green, says Pickup. "The UK's Financial Services Authority and the US Securities and Exchange Commission require that all financial firms have good business continuity, which works against any green-ness that can be applied to datacenters. All banks and intermediaries must have fully operational failover systems," he says.

Another hurdle is the "major capital expenditure in replacing installations," says Smith. He says that companies are in no rush to refresh their technology. Mumford says that it is neither practical nor financially viable to overhaul all of the bank's equipment at once. "You have to look at the cost benefit," he says.