Sao Paolo Gets as Close as London, for High-Speed Trading
January 20, 2012
Foreign investors accounted for 34.7 percent of trading in the equity market at BM&F BOVESPA in 2011.
The market now has 373 listed companies, worth $1.3 trillion. And Perseus Telecom says it now can give customers at Nasdaq OMX Group’s market center in Carteret, N.J., round trip times of under 107 milliseconds for their trading instructions or other messages, the company’s CEO, Dr. Jock Percy says.
“Now, the connection between this fast-growing Latin American exchange and New York is as fast as a typical route between New York and London,” Percy notes. “We have seen tremendous demand and need amongst our trading clients, both large and small, who need to quickly leverage the growing market opportunities in Latin America.”
Nasdaq OMX also operates what it asserts is the fastest trading route from New York to Chicago and back. That route is provided by Spread Networks, with a roundtrip time of 13.3 seconds.
Nasdaq is trying to establish itself as the holder of the fastest routes between major trading centers.
The trading opportunities, especially in Brazil, are growing almost exponentially. Last year, the total financial volume at BOVESPA set a historic record of $913.2 billion, surpassing the previous record of $907.5 billion set in 2010. The average daily financial volume also established a new record of $3.68 billion, exceeding the $3.67 billion reached in 2010.
Total l number of trades reached the milestone of 141,229,649 in 2011, surpassing the record high of 106,418,437 set the previous year. The average daily trading volume also established a new record at 567,187, exceeding the 2010 mark of 430,844.
And Brazil is attracting other exchanges as well. In 2011 alternative exchange DirectEdge said it wanted to start a rival exchange based in Rio. Meanwhile, BATS Global has been exploring opportunities in the country, entering into a partnership with Sao Paulo-based asset management company, Claritas.
Should either company open up shop in Brazil, Perseus would target them as customers, Percy says. He’s also eyeing interconnecting other exchanges in Latin America including Lima, Bogotá and possibly down the lines, Buenos Aires.
“Latin America is quickly becoming an international hub and trading desks, whether at a large bank or a hedge fund, are racing to discover the arbitrage and hedging opportunities available through exchanges like BOVESPA.,” says Percy.
Perseus believes it has a big advantage in linking the Latin American markets to the U.S. and then extending those links to Europe. For one, its partner is GlobeNet, a wholesale telecommunications company that provides secure and reliable, low-latency data services over a dual ring-protected fiber-optic submarine cable system serving North and South America.
“That’s a multibillion dollar asset” says Percy, “and by far the most technically advanced and safest of the submarine systems.”
Of course, submarine system typically fail at some point in their lifetimes and require far more repair times than fiber land lines. Not to worry, Percy says.
“The GlobeNet system is fully redundant,” he notes. In fact, it is made up of two separate cables, a primary and back-up.
