Forex Technology : Managed Fibre Networks - offering competitive advantages for high performance FX

First Published in e-Forex Magazine January 2012

Joe Morgan

As the firestorms engulfing financial markets continue to captivate participants and observers alike, the activities of managed network service providers remain, appropriately, largely in the dark. The work of companies specialising in network infrastructure beneath the ground and sea is not likely to make the headlines in the financial or popular press at the moment. But, as Joe Morgan reports in this article, these businesses are at the nexus of the forces driving the development of an increasingly interconnected global financial system, driven in part by the growth of high-speed trading. The fibre optic cabling which links trading hubs together is of vital importance in FX, a global market where traders follow the rising sun to trade on different venues throughout the day.

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Hirander Misra, an independent managing consultant specialising in electronic trading in London, says: "The FX market is a 24-hour by five-and-a-half day market. There are pockets of liquidity everywhere across different time zones with platforms running in parallel and firms connecting to nodes at different platforms and they need network connectivity out to different regions. They might be co-located in each centre but they still need to know what the black box is doing or what local trading activity is doing in other centres. These all need to be interconnected over high-speed fibre."

Spearheaded by this inexorable demand for high-speed trading among financial market participants, FX trading firms are obtaining access to underground and undersea dark fibre connectivity offering increasingly faster roundtrip speeds. Hibernia Atlantic for example, a transatlantic submarine communications cable company, has built a 3,741-mile transatlantic fibre-optic cable between Halifax, Nova Scotia in Canada to Southport in England, which has completed successful tests of 100G data transmissions. The undersea managed fibre network will soon include the deployment of Project Express, a fibre optic cable which will achieve a sub 60 millisecond roundtrip speed. The communications company has also recently expanded its services across the Asia region in Hong Kong, Singapore and Tokyo, along with plans to open new operations in India.

Meanwhile, Spread Networks, a telecommunications specialist based in Ridgeland, Mississippi, has built a 825 mile fibre optic cable in the straightest possible path between Chicago and New York City. The dark fibre infrastructure provides a 13.3 milliseconds round trip for customers using the Spread Networks Chicago-New York dark fibre to run their own private optical networks to link the two major US financial hubs.