SPEED OF ACCESS.

Emmanuel Carjat, CEO of Atrium Network explains why bespoke solutions are better than “off the peg”.

Atrium Network describes itself as being the ‘next generation’ of financial extranet provider. What does this term really mean versus say the traditional players?

Fundamentally, we’re able to provide solutions that are tailored to our clients’ requirements. And, in this particular market [Extranets], end-users can opt for mass-market solutions that are essentially very standardised with slight variations, or go for customer-specific solutions that players like ourselves offer. This is ultimately what we do: provide our clients with something that exactly matches their requirements, or as closely as possible. Clearly, different firms need different solutions delivered in different ways. As a vendor we don’t dictate to our clients, but let them choose whether they want to use an ultra-low latency ‘dark fibre’ connection, a private leased connection, a secure internet connection with an SLA – or a combination of these. We will always try to understand the different latencies involved for various markets. For high frequency traders this could well involve equities trading, an options leg and a foreign exchange component by virtue of trading another market. So, we work closely with clients to position their engines at the best location.

What are the benefits of using global financial extranets and what low latency electronic connectivity services are they delivering to buyside and sellside equity and FX trading communities?

With regard to FX and equity buyside and sellside trading communities, they’re looking for simple ‘point’ connectivity to allow them to trade. Atrium Network, for instance, has built its platform into key financial data centres throughout Europe and the Americas with its global Exchange Ring, that we continually enhance to ensure the underlying fabric (the fibre optic backbone) uses the lowest latency paths amongst these centres, as well as supporting this infrastructure on a 24/7 basis. We now have a total of 23 POPs (points of presence) globally covering 14 cities.

The company celebrated its fourth year in business this July. What is the business strategy for year five?

Having undertaken some significant investment in the network with upgrades to our Exchange Ring in Europe and the Americas – the core of our infrastructure – we see two things on the agenda, namely: 1) Geographic presence and expanding our footprint into new markets; and, 2) The provision of value-added services and further upgrades of the network. Whilst we’ve already been active in Sao Paulo, Brazil (BM&F Bovespa) for a year now, we’re building our customer base in the Nordic markets through a presence in Stockholm. There it’s essentially a very similar case to Toronto, where we have been present for a number of ATSs (e.g. Pure Trading, Alpha Systems, Omega, Chi-X Canada ) as well as the main market TSX since late last year. In the Nordic region there are a couple of equity MTFs – for example Burgundy – and it’s certainly a very vibrant local community out there. In due course we will add more FX venues. The Asia Pacific region, however, is a somewhat more complicated environment. It is far more geographically spread and less homogenised with different exchange market rules than the U.S. and Europe. That said, we usually go where our customers tell us.

Atrium scored a bit of coup by becoming the first provider to connect with the new Chi-X Canada (ATS) production environment this August. What other interesting developments have been happening in North America?

The summer months have been busy for us, as has most of 2010. We continue to increase our geographic coverage generally and add new members to both the equity and FX trading communities. On 9 August 2010 we announced that we had become the first connectivity provider to offer our clients ultra low latency access to both the existing Chi-X Canada ATS Limited’s production environment at 130 King Street, Toronto and the ATS’ new production environment at 151 Front Street, Toronto, via Atrium’s North American Exchange Ring. This was prior to Chi-X Canada’s migration slated for 20 August. The connectivity to Atrium Network provided clients with the chance to connect to the new facility right there are then and the opportunity to actively test the pre-production market data in the actual trading environment. Access through a single dedicated connection is provided using the same ultra low latency connectivity infrastructure and ‘dark fibre’ ecosystem that will be used for the actual market data once the migration was complete. Having increased the bandwidth capacity to 10Gbps (Gigabytes per second) in mid-August, from 1Gbps, on our New York to Toronto Exchange Ring, in response to increasing traffic levels between these two metro areas, we’re also considering making all our offerings 40Gbps ready. It underlines our investment in North America and the rapidly growing and evolving Canadian marketplace. In the foreign exchange space, back in July, we expanded connectivity to a range of FX destinations by hooking up to FXCM and its data centre in Bergen, New Jersey, as well as HotSpot FX, the institutional foreign exchange ECN that operates liquidity in over 50 currency pairs. This was undertaken via Atrium Network’s global extranet infrastructure. (Connectivity to Hotspot FX is via Atrium Network’s POPs in New York and New Jersey).

In terms of ultra-low latency, do you have a view on the merits of latency measurement tools and whether they can help buyside firms monitor if they’re achieving best execution?

There are two aspects worth examining here. Firstly, one needs to agree on what we are measuring, which is probably the key element. If we want to be able to start properly evaluating and comparing there must be an ‘apples to apples’ comparison. As a vendor we have been monitoring the FIX Protocol sub-committee, that has been engaged in specifying what measuring latency means (i.e. from where to where, roundtrip, mean latencies, etc). As such we have committed to a fair amount of work in that regard and the endeavour for a ‘commonality’ of approach over the issue. Secondly, once one has established what you’re measuring, market participants need to have sophisticated tools to measure it. And, tools that are accurate enough such that latencies are being measured properly. So, when people are given numbers in milliseconds or microseconds they’re being given on a certain agreed standard. It should not be a ‘multiple standard’ type race.

How does the value proposition of financial extranets stack up against the latest high speed internet and cloud computing networks?

Taking FX venues, they do have their VPN offerings, and with high-speed internet, which can offer simple, cheap access to such venues. Some extranets like ourselves offer 1Gbps access and have built their connectivity directly amongst major liquidity hubs. So, the internet has its place, but for clients who are sensitive towards dedicated low latency connectivity, extranets do offer tangible competitive advantages.