Colt Preps Direct Basildon–Eurex Access, Bolsters European Low-Latency Links

London-based network vendor Colt is preparing to launch two new ultra-low-latency fiber-optic routes between NYSE Euronext’s datacenter in Basildon, UK and central London and Frankfurt, to support trading between markets in those cities, following the exchange’s decision to grant third-party carriers direct access to the Basildon site last year.

The routes will connect the Basildon facility—which houses all NYSE Euronext European markets, including its Amsterdam, Lisbon, Paris and Brussels equity markets, its SmartPool dark pool, and the Liffe derivatives market—to Deutsche Börse’s markets in Frankfurt, with one-way latency of 4.2 milliseconds, and to an undisclosed location in London, for which Colt declines to supply latency figures.

Colt is currently taking orders for the routes, which are designed to meet demand from high-frequency traders for low-latency network infrastructure between key European markets, officials say. The link between Basildon and London is due to go live by the end of May, and Colt will roll out the Basildon-Frankfurt route—which will provide a direct link between the Liffe and Eurex derivatives markets—in July.

Previously, high-frequency traders wishing to trade between Liffe and Eurex had to use NYSE’s SFTI (Secure Financial Transaction Infrastructure) network to gain access to Colt’s London-Frankfurt route. However, last July, NYSE notified customers that it would change its policy to allow customers to connect to Basildon directly, without needing to use SFTI, says Andy Young, low-latency specialist at Colt. “It means that customers will be able to trade on those key derivatives markets without having to go in and out of London,” which will reduce latency by around 10 percent, he says.

As well as improving latency, Young says the new routes will deliver cost savings to clients, who no longer need to build out infrastructure in multiple locations. “Stitching together carrier networks is costly and resource-intensive… but now customers can buy these routes as a service without having to stump up a lot of capital expenditure,” he adds.

Colt is also optimizing its low-latency network between London, Frankfurt, Zurich and Milan—a process it expects to complete in June. In particular, the Milan leg of the network is likely to become an important route for high-frequency traders after London Stock Exchange Group-owned Borsa Italiana announced plans to move its equities matching engine back to Milan last October, Young says.

According to Young, as the electronic trading industry has matured over the last few years, the requirement for low-latency market data has increased, driving Colt to optimize routes between key exchanges to make it easier for clients to receive data from those markets as quickly as possible. “We are ensuring that we are using the lowest-latency hardware, and where we see opportunities to actually dig up the roads and iron out any kinks, we will be shortening routes to give a better latency performance,” Young says.