For trading firms, low latency trading is driving investment in connectivity and data analytics technologies.
Most enterprises turn to hosted services providers for cost efficiency. But trading firms use hosting services--particularly those provided by stock exchanges and their partners--for connectivity-speed. To meet this demand, the HKEx's latest datacenter offers hosting services with access to its trading platform through an in-building low latency LAN.
However, trading firms still need to access market data, analyze data and execute orders. To support trading firms with these services, the HKEx encourages technology providers to bundle their hosting service offerings with data feeds, applications and international connectivity services.
"The idea is to bring more choice to our customers," said Jonathan Leung, VP and head of hosting services at the HKEx. "But we do not represent or recommend any particular vendors to our hosting customers."
This ecosystem approach is encouraging many new players to enter the Hong Kong market, and one of them is London-based IT services company MarketPrizm.
"Unlike other traditional IT hosting services providers, we focus on trading and provide a full stack of services for trading at HKEx," said MarketPrizm CEO TanujaRandery.
Randery added that his firm's services are also helpful for overseas trading firms to remotely trade in the HKEx. "Firms trading in multiple markets can easily reach the Hong Kong market without setting up an entire IT infrastructure, but still enjoy low latency trading," she said.
Traditional data feed providers like Bloomberg and Reuters are also entering the space with hosted services offerings bundled with their market data feed services.
"It's a value-added service," said IDC's Daruwala. Since these players are already providing data feed subscription services to most trading firms, they're in a good position to provide other value-added services.
"Financial firms have trusted Bloomberg technology with their most secure front office information and prices," said Azhar Muhammad-Saul, head of Bloomberg enterprise products and solutions for Asia Pacific. "Markets are thirsty for data as well as faster data delivery speed."
Beside bundling its data feed subscription services with hosting services, the company provides content and tools to meet new regulatory requirements. Increasingly stringent regulatory requirements like Dodd Frank and Basel III are driving trading firms to enhance data transparency and risk management.
Bloomberg now offers risk and compliance applications to address regulations and operational risk. "The ever changing regulatory environment will undoubtedly continue to present growing challenges for financial services companies," said Muhammad-Saul.
The demand for data analysis is creating partnerships with business analytics providers. "Reuters has partnered with Tibco to bring real-time analysis on trade and markets," said Daruwala.
Moving to opex
The IDC analyst said that the phenomenon of multiple hosting services players entering the market is transforming the spending patterns among financial firms and stock exchanges. "Banks have started to examine this variety of new hosted service offerings," he said.
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