Marco Polo New World is building out its electronic trading platform to extend high-speed access to more global financial markets with the help of its majority owner Perseus Telecom, a supplier of ultra-low latency connectivity spanning over 70 markets across six continents.
The trading firm is a revitalisation of Marco Polo Securities following the acquisition of its assets in June 2013 by Perseus from Marco Polo Capital Markets, which entered voluntary Chapter 11 bankruptcy late last year. In its new guise and with new leadership, Marco Polo New World is planning significant advantages for its customers and prospects based on its commitment to providing reliable access to emerging markets and the connectivity capabilities of its new parent.
Jock Percy, chairman of Marco Polo New World and CEO of Perseus Telecom, explains: “Over the past four years, Perseus has built a global market-to-market network connecting over 70 markets across six continents. We looked at Marco Polo Securities because it had also built out a global offering to the exchange trading community that provides network rich applications many Perseus customers would find value in accessing. At the same time, Marco Polo Securities, like many financial technology companies, was burdened with the cost of maintaining the network infrastructure it operated to deliver services. Perseus acquired the assets of the company, rebranded it and replaced its network with the Perseus global network that gives Marco Polo New World customers access to ultra-low latency connectivity. Marco Polo New World can now focus on cross-border trading solutions for the buy and sell sides.”
On the name change, Kamran Rafieyan, director of Marco Polo New World, comments: “Our New World brand name and logo are based on innovation, technology and connectivity. These core values reinforce what we are committed to delivering to our global customer base.”
While Marco Polo New World and Perseus are operating as separate entities, the former relies heavily on the latter. Within 30 days of the acquisition, Perseus changed the virtual private network infrastructure the firm was built on, enhancing the services subscribed to by Marco Polo New World customers for trading with exchanges and accessing local brokers. The network provider also gives Marco Polo New World extended access to firms that are collocated where the Perseus network terminates in over 30 data centres around the world.
Dan Watkins, director of products and marketing at Perseus, provides an example: “Many companies have trade flows between the US and Brazil that use common networks and infrastrucutre. Perseus specialises in sustaining ultra-low latency connectivity and has an award winning network connection to Brazil that is over three milliseconds faster than anything else in the market. Other key markets that Perseus serves and that Marco Polo New World has access to include New York and London, between which the company has built QuanTA, the fastest trans-Atlantic network available.”
Beyond this, Perseus is developing strategic connectivity around South America, linking major markets such as Brazil with Mexico, Columbia, Peru and Chile, and back to Brazil. Marco Polo New World already has direct market access gateways in Brazil, Chile and Mexico, and by leaning on the economies of scale provided by the Perseus network, is planning to open gateways in Columbia and Peru soon.
Anthony Orantes, managing director of Marco Polo New World, says: “We can now offer electronic access to trading in a country such as Peru, which uses mainly manual systems and is a tenth the size of the Columbian market. We can do this by piggy-backing on the Perseus network and providing low-cost gateways to brokers in the local market.”
Latin America is a prime market for Marco Polo New World, along with Russia, India, China and Turkey. The company is looking at access to more Eastern European countries and at markets in Africa, but notes that while routes to nearly all the world’s markets have been designed by Perseus, they will not be built until there is sufficient customer demand.
The ultra-low latency technology provided by Perseus and used by Marco Polo New World includes fibre optic and wireless networks, as well as transatlantic submarine cables. For example, the New York to London link uses Reliance Globalcom cable for the transatlantic portion of the journey and Perseus fibre optic transmission at either end to connect to exchange venues. The company augments fibre optic portions of the global network with wireless transmission where there is customer demand and has, so far, built out wireless options in Europe, North America and South America.
Percy says the cost of wireless connectivity is not for the faint hearted and notes that wireless has a fraction of the capacity of fibre optics, but it is an option favoured by many high frequency trading systems that look for precision trading opportunities, perhaps in a symbol, contract or currency arbitrage between markets.
In response to this, Perseus provides, by way of example, diverse fibre optic and wireless paths between London based trading venues and Frankfurt based exchange venues. Wireless offers around a 4.6 milliseconds round trip delay and fast fibre for diversity and larger capacity offers an 8.3 millisecond round trip delay. More specifically, the fastest fibre for the round trip from NYSE Liffe matching engines in the NYSE Euronext data centre in Basildon, to the east of London, to Eurex and Deutsche Borse matching engines located at the Equinix FR2 data centre in Frankfurt has an 8.3 millisecond delay, with the second fastest fibre adding diversity and coming in with a nine millisecond delay. Perseus owns and operates both these routes, as well as the fastest wireless route.
The network provider uses transmission equipment from companies including Ciena and Arista Networks, but notes that the network is not purely about latency, but also about throughput. Percy explains: “Our primary optic path is not only about speed, but also about best execution. This is achieved by ensuring quality delivery of data, which helps to mitigate risk. Any trading firm can use the network as we service a broad area of the market, from small capital partnerships to exchanges and vendors of electronic trading solutions. Our operating procedure is to build out the fastest fibre, then if there is demand, we build wireless connectivity into terrestrial sections of the network. Our fast fibre, fastest fibre and wireless all use the same underlying cable systems.”
Perseus’ latest addition to its ultra-low latency portfolio is PrecisionView, an ultra-low latency, real-time monitoring application built in partnership with ITRS Group to provide financial institutions with a real-time, granular view of network and throughput performance.
For Perseus, Marco Polo New World, which itself has about 70 active clients worldwide, is one of 120 customers from across the financial, media and broadcast sectors. From the financial sector it names customers including Fidessa, Cantor Fitzgerald, Link Investimentos and the CME Group, as well as unnamed high frequency trading firms. None operate in the exact same space as Marco Polo New World, but Percy concludes: “We are agnostic in the finance, media and broadcast markets. If acquisition opportunities come up we will consider them if they make sense.”