Pitfalls of Proximity Hosting
Zero latency is the optimal trading speed that all firms hope to be able to achieve at some point in their life. But until that can become a reality instead of a dream, there is a race to keep reducing latency from all the aspects of the trading process. This is from the server to the messaging to the sending and receiving data, and each piece must be optimized to reach its zero latency goals. For example there is a data center in Weehawken, NJ houses five major exchanges including: the New York Stock Exchange, Philadelphia Stock Exchange, and BATS Trading. This idea is a way to ensure there is almost zero latency built into the trade to those exchanges but not really the complete puzzle. Even though the data centers that host the exchange as a simple cross connect, is rarely the only exchange a firm is trading on at one time, so how do we close the cap? The solution is simple. All one needs is a carrier who can transport the data when latency and performance are important but not that critical at the moment. When the latency however reaches a level that is critical to your company’s success and for your strategic advantage, you made need to relook at your approach and consider a more agnostic approach. This allows you to work with each carrier and see which one is able to provide you their best solutions between locations. This however may not be the best solution if you have multiple desires and needs for this problem. In the race to Alpha, the combination of Proximity Hosting paired with Low Latency Transport is the Key to your companies success.
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