Published On: Wed, Jan 13th, 2010

Exchanges Offering Co-location in Asia

Hosting ServerCo-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 .

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Displaying 10 Comments
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  1. Phil Joslin says:

    Thank you . Interesting article

  2. Tony says:

    Interesting article, indeed. Note that another major exchange in Asia that offers a co-location service since May 2009 is the Tokyo Commodity Exchange (TOCOM). More info on this new feature can be found on http://www.tocom.or.jp

    Tony – Business Development – TOCOM

  3. Steve says:

    Hi Tony,

    I thought I had heard that TOCOM did but I wasn’t sure. I went to the TOCOM website to find some information but was unable to. Do you know where I can find it?
    Thanks
    Steve

  4. Sanjay says:

    NSE (National Stock Exchange) of India has started offering co-location services. We are in the process of hosting our ‘Algo Trading System’ in the co-located servers..will keep you posted on our progress.

  5. Steve says:

    Thanks for the info Sanjay. Please let us all know about that kind of service at the NSE. We all want to know.

    Steve

  6. Hunter Liao says:

    Does anybody know that why HKEx and KRX do not provide co-location services so far?

  7. Steve says:

    Hong Kong has been focusing on China and IPO’s not so much on professional trading services. That being said though they did announce a new data center which will likely address this issue
    http://www.asiaetrading.com/hkex-set-to-start-developing-a-next-generation-data-centre/

    I understand that KRX did have a colo service but it was suspended by the KFIA as not leveling the playing field for traders who didn’t have colo access.

    What about the TWSE Hunter? I know they announced this service but it is difficult to get news and information out of the TWSE
    http://www.asiaetrading.com/taiwan-stock-exchange-to-launch-co-location-services/

  8. Suketu Patel says:

    Nice Article, in an emerging markets like India, this has been offered. Not sure how many takers are there for this? Do you have any concrete information in terms of how many sell side firms offer this in India?

  9. Guillaume Roux-Chabert says:

    Many thanks for the article. Where or who should we contact to know more about the sponsored access in Malaysia?

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