is rolling another connectivity service between Chicago and the NYC metro area – this time one that addresses the market that does not need the lowest latency, and which is more price sensitive.
IntelligentTradingTechnology.com caught up with the company’s senior vice president of product marketing Brennan Carley to discuss the new service, the different requirements of financial markets players, and how Spread is meeting them along with its partners.
Q: With the announcement today, you now offer three Chicago to NYC/NJ services, with different latency SLAs. Why are you doing this?
A: The three services (dark fibre, ultra low latency, and low latency) address different segments of the market:
– The dark fibre service (13.33 milliseconds) is offered for those firms that need the absolute lowest latency, who want the ability to run multiple wavelengths between NY and Chicago (e.g. to support multiple strategies), and who want to control their own network.
– The ultra low latency wave service (14.75 milliseconds) is for firms that want excellent latency and who may not need multiple wavelengths, and who would rather buy a managed service than run their own network.
– The low latency wave service (15.9 milliseconds) is for firms that need competitive latency but are more economically sensitive. It is also ideal for firms that have an existing service and want diversity, since it is as fast as any other wavelength service in the market while providing carrier diversity.
(There is one other commercially available lower latency service, but it only offers <1G bandwidth).
Q: Can you elaborate on the different markets that you are addressing for your two wave services – for what types of company/application does the latency difference of about a millisecond really matter?
A: We have seen interest in the ultra low latency wave service from firms that are engaged in electronic market making and similar high frequency strategies.
The demand for the low latency wave service has come from three places:
– Firms that have HFT strategies and are more price sensitive.
– Firms that have strategies that depend less on latency, such as statistical arbitrage or more traditional algorithms, but that still need to be competitive.
– Firms that are in the market data, order routing, or extranet business, who have an existing route at 15.9 millisecond and want a diverse route with the same latency (today such firms may have a primary route at 15.9 milliseconds and a secondary route at 16.5 millisecond or higher, which means that the best SLA they can offer to their customers is 16.5 milliseconds or greater.)
Q: For your wave service, you are now servicing endpoints in Newark, Secaucus, and Weehawken – have you laid your own cable within the NJ metro area, or are you working with a partner?
A: Spread Networks Wave services to Secaucus uses our own dark fibre from Chicago to Carteret, and Spread Networks own dark fibre from Carteret to Secaucus (which is the shortest path between Carteret and Secaucus, and which is available commercially for customers who just want low latency connectivity between Carteret and Secaucus). For connectivity from Carteret to Newark and Weehawken, Spread Networks has purchased dark fibre from an established metro dark fibre provider, who we cannot name.
Q: You’ve announced a number of resellers for the wave service. In terms of your agreements with them, how are they differentiated in what they are offering?
A: Spread Networks believes that each of the wholesalers and resellers has different things that they bring to the market, and we recommend that you contact each wholesaler and reseller directly to understand their respective value proposition. They are also each represented on the Spread Networks “How to Buy” page on the web site (http://spreadnetworks.com/how-to-buy).
Q: Lately, there is increasing debate over the real business case for trading firms in being the absolute fastest. Are you still seeing demand for your Dark Fibre service, or is that market saturated, or even shrinking?
A: While not every firm or strategy benefits from the fastest connectivity, there are many firms that do. Since Spread Networks’ Chicago-NY Dark Fibre went live in August of 2010, we have continued to add new dark fibre customers (as well as wave services customers) and we have other firms that are actively evaluating our dark fibre.
Q: In Chicago, your endpoint is at 350 East Cermak. Any plans to extend your network to the new CME data centre in Aurora?
A: We have no current plans to extend our network to Aurora.