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Low Latency EMS, Connectivity Push Into New Asset Classes, Geographies

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Accelerating a trend that began perhaps a couple of years ago, vendors of execution management systems, and of connectivity and co-lo services, are continuing to push into new trading opportunities, beyond the core equities markets of major financial centres. Indeed, a raft of news in recent days – as the business world gets going after the summer break – points to much activity in pushing the low-latency frontiers.

At an industry level, the Fixed Income Connectivity Working Group (FICWG), an initiative comprising the global investment banks committed to increasing transparency and efficiency in the fixed income markets, has been working with venues expected to register as Swap Execution Facilities (SEFs) in the U.S. and as Organised Trading Facilities (OTFs) in Europe, to create a set of global best practices for the trading of IRS and CDS, using standards, such the FIX Protocol and FpML. To date, FIX adopters include BGC Partners, Creditex, Dealerweb, Eris Exchange, GFI Group, ICAP, iSwap, MarketAxess, SwapEx, Tradition Trad-X and Tradeweb.

Trading Technologies International is one EMS vendor that will connect into Eris SwapBook when it rolls out a new gateway for its X_Trader platform in the fourth quarter. Meanwhile, FlexTrade Systems is linking its EMS to BGC Partners’ eSpeed platform, to trade U.S. Treasuries.

Across the pond, Object Trading has added the London Metal Exchange to its FrontRunner trading system, while SunGard has continued to push into the Eastern European market, hooking Polish broker Biuro Maklerskie Alior Banku into the Warsaw Stock Exchange via its Valdi EMS. And BSO Network Solutions has expanded its global connectivity, offering a London to Moscow route with 40 milliseconds round trip latency, and London to Dubai, at 125 ms round trip.

Further afield, FFastfill has added the Sydney-based ASX 24 derivatives to its FFastFill Horizon multi-broker network.

Such developments underscore the increasingly important role of outsourced network and execution management vendors in the capital markets – allowing trading firms to move quickly into new geographies and asset classes without huge upfront infrastructure investments. While the latency of such services might not be the lowest, the offerings are generally competitive for firms not operating at the cutting edge.

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