Cryptocurrency exchange Kraken has announced plans to introduce a colocation service aimed at clients seeking ultra-fast trade execution. The service, set to launch later this year, will provide access to ultra-low latency trading via Kraken’s European data centre.
Clients will be able to rent cloud compute resources from Beeks, a provider of low-latency connectivity and analytics solutions, or install their own physical hardware at the data centre.
“Kraken is one of the more sophisticated cryptocurrency exchanges, attracting significant institutional flow and a client base that includes algorithmic traders,” says Gordon McArthur, CEO at Beeks Financial Cloud, in conversation with TradingTech Insight. “In traditional equities markets, most exchanges offer colocation services, allowing firms to place their infrastructure inside the exchange’s data centre for direct connectivity. Until now, this hasn’t been available in crypto, largely because much of the industry was built in the cloud.”
He continues: “Kraken has licensed our Exchange Cloud® product, which combines the flexibility of cloud infrastructure with the direct connectivity of traditional colocation. It’s the first solution of its kind in the crypto space, and interest has been strong even ahead of its planned late-summer launch. This service will allow clients to rent compute power from Beeks and connect directly to Kraken’s exchange, enabling market making, algorithmic trading, and other high-performance strategies. Essentially, it brings an equities-style colocation model to crypto for the first time.”
Kraken expects the service to enhance trading performance and scalability while maintaining fair and transparent access to its global cryptocurrency markets. Traders operating from London, for example, could see sub-millisecond latency. While latency improvements will vary by location, traders using Beeks Exchange Cloud colocation services will experience similar low-latency benefits as those with direct hardware installations.
“Many cryptocurrency exchanges operate in the cloud, where infrastructure can shift unpredictably,” notes McArthur. “As a result, traders might experience three milliseconds of latency one day and eight milliseconds the next, which is far from ideal in our industry. With this colocation service, latency will be both low and deterministic. It provides a direct connection with no reliance on the internet, eliminating packet loss—an issue that frequently disrupts trading over traditional internet connections. Without the internet in the equation, security is also significantly enhanced. The result is a fast, secure, and reliable low-latency solution, offering advantages that haven’t previously been available in the crypto space.”
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