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Smoke or Fire in Latency M&A?

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It’s surprising how market downtime – that is to say the just-passed holiday period – continued to generate tittle-tattle, which of course we were able to monitor from the southern tip of Europe thanks to the modern marvel that is the iPhone.

Tittle-tattle it may be, but something is afoot in the low-latency connectivity space. Here’s the chronology:

Just before we skedaddled out of Heathrow on what might have been the last flight south before the great deluge we ran into an old friend at Royal Exchange. MarketPrizm – the low-latency market connectivity technology supplier formerly known as Chi-X Global Technologies or even Cicada – was close to securing a buyer. That the company has been on the sales block for most of the second half of 2010 was pretty much an open secret, compounded by the departure of Chi-Tech CEO Greg Smith midway through the campaign.

The Royal Exchange’s coffee cups were muttering the name of Colt. We duly – and dutifully – followed up through official channels. No dice. But unofficial ones suggested that two possible investors in MarketPrizm were close to making a move. The idea, these unofficial said, would be to expand the company’s low-latency connectivity capabilities in Asia.

With this we jetted off to our place in the sun, where the iPhone began rattling with new M&A talk. This time it was French low-latency connectivity provider QuantHouse’s turn to play acquiree. The interested party, according to the iPhone? SunGard. Again, we dutifully followed up through official channels. Again, no dice. But unofficial ones did suggest that QuantHouse is in fact in the midst of a funding round aimed at – you guessed it – raising cash to finance an expansion of its operation into Asia.

Fast forward to this morning. Colt announces it is providing a new proximity services capability for clients seeking fast connectivity to London Stock Exchange’s data centre in the City of London. The new capability is offered as a managed service by Colt and allow clients to link to other execution venues linked by Colt’s extensive fibre network.

Nothing untoward in that. But, would Colt welcome help from a connectivity specialist like MarketPrizm, or indeed QuantHouse, which already offers connectivity into LSE’s data centre? Very possibly. Does this explain the wintry gossip? Also very possibly.

We’re waiting for the penny to drop. In the meantime, any suggestions warmly received.

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