the use of Modular Data Centers to address the latency concerns in the financial segment

(Last Updated On: May 11, 2011)

I would like to start a discussion regarding the use of Modular Data Centers to address the latency concerns in the financial segment of our industry. Do you see the Modular DC a player?

As a reseller of the Datapod System, we have recently seen a jump in inquiries from the financial industry. Some of the challenges that these organizations are trying to solve are available space for data center expansion in populated areas (Chicago, NY, LA). With fiber, more specifically, “dark fiber” becoming more available, we have been approached with the thought of depolying modular data centers in areas that have:

1.) Cheaper Power
2.) Access to Fiber
3.) Cheap Real Estate

I believe that this is a very interesting approach. For example, Financial Company A needs to expand their DC. They go modular and deploy in a more rural area. They negotiate power rates with a smaller, less stressed electrical provider and establish long-term agreements that lock in their rate, etc. In my opinion, this immediately provides lower OPEX for each new data center deployed.

I would like the groups thoughts on this type of strategy.

It is getting to a point where dark fiber is not good enough for some applications like high speed/high frequency trading. These companies want their servers to be located next to an exchange. Everybody is in a latency arms race – milliseconds are so yesteryear, we are trying to cut microseconds now.

Thank you for your input. Could you provide some more information on where this demand for ultra-low latency occurs, is it only the largest of brokerage firms or is it a blanket approach for all companies? I can respect the high speed/high frequency trading aspect but, what about the availability of suitable locations to deploy this types of facilities?

This is true for all brokers and market makers. You have to be as close to the exchange as possible.

Co-location data centers next to exchanges are expensive but these companies are willing to pay the premium.

Is there a play for modular in the financial markets? Do you see the modular typologies as something that can help lower costs in this market segment?


NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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