Dan Barnes
Dan Barnes

FX co-location: what’s fuelling the rush?

The demand for co-location services is still booming despite the market’s maturity but, as Dan Barnes discovers, the detonation of the Swiss Franc cap in mid-January has necessitated some emergency packages for firms in trouble.

Co-location minimises propagation delay by reducing the distance that data has to travel between the sender and receiver, therefore lowering the latency that trading signals and data incur. High-frequency trading has driven a lot of the interest in low-latency technology, but speed also matters for other types of traders who are keen to execute orders as rapidly as possible. When it comes to trading on the financial markets every microsecond matters and co-location providers have several methods of delivering the connections that their clients require. “The first factor that should be considered is the location diversity,” says Nikolay Dvas, Project manager at Webzilla. “Physics puts a limit on signal transmission velocity, and only by being present in different regions can a colocation provider satisfy a broad range of demanding customers. Secondly, network quality is crucial, with low latency and high stability being particularly important. When choosing a colocation provider, any...continued

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