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STEP FIVE: Co-locate. Even With Your Competitor.
July 6, 2009
This month, the New York Stock Exchange will begin talking to potential occupants of its new data center, scheduled to open in New Jersey next year.
And don't be surprised if electronic networks that compete with each other -- and with the NYSE -- are sitting under the same roof.
The data center co-location plans - in which market participants locate their servers at the same facility as the exchange servers - were unveiled by Stanley Young, CEO of NYSE Technologies and co-CIO of NYSE Euronext, at the Securities Industry and Financial Markets Association's Technology Management Conference. This will be the world's first exchange-owned co-location facility open to competitors, Murray White, NYSE Technologies' senior vice president, said.
"Although we plan to evaluate each trading venue as a potential occupancy partner on a case-by-case basis, we are willing to speak to pretty much all comers about joining us in northern New Jersey," White said. "We think of this as a game-changer for us."
As a result, there will be lower barriers to entry for new market participants, he said. Instead of up-front capital expenditures typically measured in tens of millions of dollars, firms can budget tens of thousands of dollars for monthly operating expenses, the NYSE figures.
Co-location customers at the new data center will be able to trade all NYSE Euronext markets -- as well as those operated by participating venues -- from a single co-location environment, White said.
About 20% of the data center will be used for the exchange's own operations, he said. The rest will be available for market participants:.
The New Jersey center will include an ultra low-latency network, improved matching engines and a "national security-caliber secure environment," White said.