Colt Readies Low-Latency Deutsche Börse Hosting

Colt Telecom is creating a hosting facility that will reduce data latency for Deutsche Börse members with algorithmic trading applications by co-locating applications in Colt's data center, under an agreement unveiled last week between the network services provider and the exchange.

The final touches are now being added to Colt's hosting facility, which is expected to be fully operational by March, providing low-latency data and trading on Deutsche Börse's Xetra cash and Eurex derivatives markets.

Although the new hosting service has yet to be launched, Colt officials say that there has already been a flurry of interest. "We've already had a number of leads. We have a number of customers who are teed up and ready to receive it, but those deals haven't been inked yet," says Ian Jack, business development manager for European financial services at Colt.

The partnership complements a similar hosting arrangement between Deutsche Börse and IX Europe that was launched last October and has already attracted 20 customers, including seven in London, one in Dublin and three in the US.

Exchange officials say that the difference in latency between the two service providers is negligible, and that neither is designated as a preferred partner.

"They're not getting into bed with everyone. They've picked two suppliers. IX Europe was the first and we're the second," says Jack. "They're really pitching this as one site for the live implementation and one for the back-up… I think they are comparable services, both with sub-millisecond round-trip delays," he adds.

For Colt, the deal should cement the hosting services already offered to financial institutions and exchanges across Europe. "Colt has 14 data centers across Europe. We currently connect to the top 20 stock exchanges and [provide hosted access to] seven of them," says Terry Quigley, head of financial services at Colt.

Deutsche Börse also announced last week an €8 million investment to increase the speed of its Xetra platform to cater for algorithmic traders. As of April, the exchange will provide order book updates with up to 10 levels of market depth and un-netted pricing data at round-trip times of potentially less than 10 milliseconds for the fastest orders, exchange officials say.