Exchanges Seek Partners to Boost Global Expansion Plans
Exchanges have fine-tuned their strategy for expanding their global footprint to the point where it’s almost become a formula: acquire or create partnerships with technology providers, form alliances with local service providers and deploy data centers.
“A key strategic direction continues to be the partnering with local technology and business partners to ally a strong local component and market expertise to an array of global services,” said Feargal O’Sullivan, global head of alliances at NYSE Technologies, the commercial technology arm of NYSE Euronext.
The objective is to build out the community or ecosystem of vendors and suppliers that trading firms rely on to simplify their access to the markets.
“It’s about creating environments where clients can trade anywhere they want, obtain the technology support they need and reduce their costs of doing business,” O’Sullivan said.
TMX Atrium, the trading and technology firm owned by Canadian exchange operator TMX Group, provides market neutral connectivity to 28 major trading venues in 11 countries and provides connectivity to TMX matching engines from four data centers in Toronto.
“Exchanges can offer neutral connectivity to execution venues or act as a local or global ‘on-ramp’ to its own markets,” said Andre Craig, vice-president at TMX Datalinx, the information services division of TMX.
“Exchanges will continue to collaborate in the area of interconnectivity as a means of facilitating order flow and data transmission between one another,” said Craig, adding that TMX has undertaken several of these initiatives because they are effective at lowering the barriers between trading venues.
NYSE has replicated its global connectivity strategy in Canada, Mexico, Japan and, most recently, Brazil.
“NYSE Technologies has prioritized Brazil as a key market for its global expansion strategy,” said O’Sullivan at NYSE Technologies.
In the past year, NYSE Technologies has continued to expand its range of electronic and trading services into Brazil. In collaboration with Americas Trading Group (ATG), a provider of electronic trading products and services, it’s launched a high-performance order routing and market-data platform that delivers the lowest possible latency between New York and Sao Paulo, also offering low-latency access to key trading venues in Latin America.
The network serves as a conduit for low latency market data and global market connectivity services linked to a managed transaction hub installed in ATG’s data center that includes access to and for clients throughout Latin America.
“We are providing ATG with technology, including SFTI [secure financial transaction infrastructure], managed transaction hub and Superfeed [a market data service managed by NYSE Technologies], so that clients outside Brazil can access the local markets,” O’Sullivan said.
ATG’s clients benefit from an array of services ranging from cross-border flow to the different exchanges and brokers in Brazil, Mexico, Chile, Colombia, Peru and Argentina, low latency network connectivity to global market access to locally developed algorithms and trading screens, and advanced technical and business intelligence reports.