More than half of financial trading companies think they should be able to access markets more quickly, with the average trading desk estimated to be losing $5m a year because of poor connectivity.
In a survey of 289 senior trading managers, 40% said current connectivity is hindering their entry into new markets and 32% said they have technology failures at least once a week.
Almost half (49%) of traders in Europe, the US and Asia believe that delays in connecting to new markets result in missed trading opportunities, and 47% think it leads to the loss of clients.
“In a time-pressured trading environment, it is not surprising that trading desks want to access markets faster,” said John Loveland, VP capital markets at Colt. “Without the right technology in place at the right time, it becomes difficult to meet client expectations and retain strong client relationships, as well as take advantage of trading opportunities as they arise.”
Read more about connectivity in the trading sector
- London Stock Exchange claims its Turquoise trading platform is the fastest in the world, following its migration to the MillenniumIT core trading system.
- Colt enables trading companies to connect to the London Stock Exchange datacentre in 100 microseconds, following a deal with the UK's primary trading venue.
- Speed is becoming a commodity and exchanges will have to look at other ways to stand out from the crowd.
Loveland said ultra-low latency is not the only consideration when it comes to a firm’s connectivity strategy. “Reliable and faster connections to the marketplace are essential to trading desk performance,” he added.
The study, conducted by Incisive Media, noted that an increase in regulation and market complexity was also partly to blame for the long delays
Colt recently launched a financial services extranet, known as Colt PrizmNet, which connects providers of financial content – including market data, research and other services – to trading firms.
Capital markets firms will be able to use the extranet to connect to new markets and clients using a dedicated private network with low latency.
Alasdair Haynes, CEO of European share trading platform Aquis Exchange, said: “Colt PrizmNet allows our members to choose from a wide variety of content and service options, to connect to markets quickly and with a guaranteed level of latency.”