The news this week that Direct Edge is planning to set up shop in Rio de Janeiro is indicative of the growing importance of Latin America as a financial trading region, and one where low-latency technology is playing a leading role in transforming the marketplace. And the action is not just happening in Brazil, with developments underway in countries, such as Columbia and Mexico.
Direct Edge plans to bring its matching technology to the Brazilian marketplace by the fourth quarter of 2012, supporting trading in equities, ETFs and depositary receipts. As such, it will compete with the incumbent Sao Paulo-based BM&FBOVESPA, which is rolling out its new Puma trading system, developed in partnership with the Chicago Mercantile Exchange, and gearing up for a new data centre with expanded co-lo facilities early next year.
BM&FBOVESPA’s existing trading system has already fueled significant activity among information and technology vendors, with the likes of Fidessa, Orc Group, QuantHouse, StreamBase Systems, SunGard and Ullink all developing and deploying offerings related to the marketplace.
Connectivity into Brazil from the U.S. has also seen a broadening of offerings, and lower latency. CFN Services (in conjunction with local broker Link Investimentos), Orange Business Services and TMX Atrium all provide services. As does Perseus Telecom, with a 106 millisecond rountrip offering, based on GlobeNet’s submarine cable. Hudson Fibre Network is also readying connectivity based on GlobeNet’s cable.
Elsewhere in the region, low-latency trading is on the rise. In Mexico, Fidessa just added Grupo Financiero Banorte to its network, providing DMA co-lo access to the Bolsa Mexicana de Valores. And local broker Finamex recently introduced a number of algorithms to leverage arbitrage opportunities between fungible equities trading on U.S. markets and the Mexican exchange.
Meanwhile, SunGard’s Valdi order execution system has been certified to connect to the Bolsa de Valores de Colombia in Bogota. Valdi already provides connectivity into equities and derivatives markets in Brazil, Chile and Mexico.