Exchanges Offering Co-location in Asia
Co-location or proximity hosting as its also known is nothing new in the west. But like most every electronic trading innovation spawned in the west the east eventually comes around.
For the uninitiated proximity hosting is where a room full of stacks with routers and servers is as close as possible to the exchange even within the same data center in order to minimize order roundtrip latency, provide true Direct Market Access (DMA) and foster the algorithm culture. Traders are of course off-site with their front end either in the next room or across the world connected with any number of pipes from internet to fiber. Any low latency trading application worth its salt, however, is server based anyway with the client PC merely acting as a control panel to the server. Good examples would be Orc’s Liquidator or RTS’s Tango.
Tha Australian Securities Exchange (ASX) has offered collocation services since July 2008 and the Singapore Exchange (SGX) partnered with SingTel boasts round trip latencies of less than 1 millisecond. Bursa Malaysia offers what it calls Sponsored Access and the Tokyo Stock Exchange (TSE) plans to expand its existing co-location facility in the wake of its recent technology upgrade.
The latest entrant to the exchange sponsored co-location service is the Bombay Stock Exchange (BSE). They announced this week in a tie up with Netmagic Solutions a managed IT service provider. The BSE is trying to raise its profile as the preferred exchange in India after it recently changed its exchange fee structure in its derivative section to a taker maker model; the only such exchange to do so in Asia.
Hong Kong and Taiwan’s exchanges aren’t offering proximity services at this time but it will only be a matter of time before all of Asia’s bourses provide co-location .