Equinix Gets More Locales Closer to Exchanges
November 2, 2009
Data center services provider Equinix's announced plans to acquire competitor Switch & Data Facilities Company is a move that will add 34 additional data center sites in 22 markets across North America to the collection of the Foster City, Calif.-based co-location facilities giant.
While financial services is only one of several industries Equinix and Switch & Data serve, the acquisition could provide the trading community across the country more ways to get closer to exchanges by setting up servers in any one of these Equinix facilities, suggest analysts.
Anyone involved in algorithmic trading who wants sub-couple millisecond response-to a buy or sell order-is going to look at proximity, said Lydia Leong, research director with Gartner.
"You have to be right there," she said. "So if you're based in St. Louis, but you want to do algorithmic trades with an exchange located in New York, you probably want to be located effectively at that exchange, or someplace extremely close to it."
The $689 million acquisition, expected to close in the first quarter of 2010, will extend Equinix's presence in 16 new markets across North America including Atlanta, Denver, Miami, Seattle and Toronto, as well as provide a platform for the future expansion of Switch & Data's facilities.
Purchasing Switch & Data "has a lot of it has to do with being able to break ground in new markets but have facilities already up and running," John Knuff, director of business development for Equinix told Securities Industry News.
Right now, Equinix "doesn't have much of a footprint outside of main 'big Internet' markets," Leong added. "Acquiring Switch & Data was a fast way to get into those markets and to pick up some attractive properties as well."
There will be more options for businesses looking for high-speed choices as a result of the acquisition, "particularly in the NY metro area, where Equinix will now own the North Bergen, N.J. Switch & Data facility, which will give them a lot more capacity to serve more financial services clients in [that area]," said Dan Golding, vice president of Tier1 Research, a provider of independent IT analysis on the hosting and co-location market, referring to S&D's 163,500-square foot data center facility.
"All sectors relating to low-latency electronic trading infrastructure are experiencing strong growth accompanied by increased competition and M&A activity to help capture greater market share," Donal Byrne, CEO of latency management systems provider Corvil, which places delay monitoring devices for clients at data center sites.
FACING NEW COMPETITION
The acquisition will further strengthen Equinix's position as a dominant provider of data center services to the financial services industry at a time when NYSE Euronext is wrapping up construction of a 395,000-square foot data center across the Hudson River. Its Mahwah, N.J., facility is slated to open its doors in the third quarter of 2010.
About 30 miles away, Equinix is building out its NY4 International Business Exchange (IBX) data center facility in Secaucus, which upon completion will be 340,000 square feet.
The Mahwah site, according to the NYSE, has capacity to host every U.S. electronic exchange venue operating today and for the next 20 years adding that, in fact, all activity on every North American exchange can be processed in the new data center. NYSE declined to comment on Equinix's acquisition.
