Archived Content
The following content is from an older version of this website, and may not display correctly.
Under the paragraph on shareholder value in the statement issued by Deutsche Boerse and NYSE Euronext announcing the planned merger, it said: ‘The combination is expected to generate annual cost savings of some EUR 300 million/US$ 400 million, principally from information technology, clearing, and market operations, as well as from corporate administration and support functions.’
All mergers lead to rationalisation but what part the data center operations will play in the efficiency drive only the company knows.
What have we where?
Regular readers will be well aware of the infrastructure investments made by the NYSEEuronext. The company’s much heralded Basildon super data center is on stream and handling real trading information and trades. In November last year the company announced that it had migrated all of its matching engines for European markets to the Basildon data center – known as its European Liquidity Center.
The 400,000 sq ft facility is broken down into seven 3MW, 10,000 sq ft data halls. As far as is known, one is occupied, the second is being commissioned and the roll out of the others will happen as demand dictates.
NYSEEuronext also has 400,000 sq ft of new data center space in Mahwah, New Jersey. With these investments, totalling over $1bn, the company took the decision to be a technology and data center player.
In its full year financial statement issued on February 8th 2011, it said: ‘The Information Services and Technology Solutions segment achieved its full-year target for revenue from the NYFIX acquisition, signed multi-year managed services agreements with the Tokyo and Warsaw exchanges as well as several mid-tier and global investment banks and experienced increasing momentum in the SFTI sales as well as co-location revenue driven by the launch of NYSE Euronext’s two new state of the art data centers…NYSE Technologies was selected by Goldman Sachs to build and support its new Multilateral Trading Facility (MTF), SigmaX. The platform will be hosted and managed by NYSE Technologies from NYSE Euronext’s European Liquidity Center in Basildon.’
At the other end of the investment scale, as the news broke about the merger talks NYSE said it had taken some space in Interxion’s City of London data center to cut latency times to the London market. This is part of a stated strategy of using local hubs to link into its major data centers through numerous colocation players. London data center City Lifeline has a similar deal in place with Deutsche Boerse.
German Plans
Meanwhile on the German side of the fence, Deutsche Boerse has some interesting projects planned for 2011.
One of the biggest that has been made public is the planned roll out of what it is calling a single hub for trading systems through a deal to take space at Equinix’s Frankfurt FR2 international business exchange.
One of the biggest that has been made public is the planned roll out of what it is calling a single hub for trading systems through a deal to take space at Equinix’s Frankfurt FR2 international business exchange.
On July 14th last year Deutsche Boerse said it would run all of its high frequency trading through the Equinix site ‘where electronic trading platforms will be deployed and acting as the central colocation site for customers of Eurex, the international derivatives exchange, and Xetra, the cash market within Deutsche Börse Group.’
Currently the Eurex matching engines are distributed over two data centers and the plan is to move all of its matching engines into the Equinix facility. The company said roundtrip times will be as low as 0,12 – 0,15 ms once both engines are collocated within the Equinix site. Equinix already provides data center solutions to Deutsche Börse Group in Frankfurt, Chicago, New York and Paris.
A spokesman for Deutsche Borse confirmed that the Equinix roll out has started and will happen.
Other interests within Deutsche Borse include the wholly owned and operated Clearsteam Technology which runs from a Luxembourg data center. Clearstream employees are experts in settlement and custody. Deutsche Boerse AG operates the German data centers, a primary and a secondary data center in Frankfurt–the company won’t say how big-which focus on trading and clearing while Deutsche Borse Systems operates a data center in Chicago.
The statement announcing the merger of the companies said: ‘The combination also brings together high growth market data & analytics, index, and technology services businesses...and a fast-growing technology services and trading infrastructure provider.'
‘On the post trade side, the successful Clearstream business of Deutsche Boerse with its strong and growing presence in Asia would be even better positioned for future growth, as the combined group will have an enlarged and truly global customer base.’
The company also has its own play in the collocation space through partnerships with Equinix and Colt Telecom playing host to over 100 member companies.
How many is enough?
To attract shareholder support the first things to be promised in any post merger situation are the cost savings realised by rationalising overlap of effort and assets.
Every part of both NYSE and Deutsche Boerse businesses is in one way or another firmly rooted in the data center.
With one large, brand new data center sitting in Basildon, UK, and another sitting in Mawhah, Northern New Jersey, realising the potential of those assets would be top of the agenda for any merged company.
What direction those efficiency and streamlining talks take once the deal is signed will be vital for data center staff, suppliers and operators.
One question is could the Frankfurt Stock Exchange be run from Basildon?
Dow says that should something like a sell off happen and Basildon and Mahwah become third party independent assets then it would truly be a game changer.
Where do we go from here?
One question is could the Frankfurt Stock Exchange be run from Basildon?
When asked, James Dow, CTO at CSTechnology, said: “One could run the Frankfurt Stock Exchange from Basildon, the question is, do you want to? To date Deutsche Boerse and NYSE have fundamentally different approaches. One laid off risk in favour of a partnership approach, through its deal with Equinix. The other, NYSE, onboarded risk to play in the colocation business. Deutsche Boerse does not have anything equivalent to Basildon, a shining palace on the hill. The question is does the merged entity sell Basildon to someone like Equinix and move into Frankfurt. Where do I concentrate liquidity? It makes sense keeping derivatives and cash equities close together. Another question is what is the compelling value to a market operator to own real estate?'
Dow says that should something like a sell off happen and Basildon and Mahwah become third party independent assets then it would truly be a game changer.
Where do we go from here?
The fact is that the only people who know are sitting around the board tables at NYSE and Deutsche Boerse but with $400m in annual savings planned and IT earmarked to deliver it, whatever happens, we are talking about change at a data center scale.
Milestones
February 15th 2011
February 15th 2011
NYSE and Deutsche Boerse announce plans to merge
November 5th 2010
NYSE Euronext completes migration to new UK data center
July 14th 2010
Deutsche Boerse announces algo trading colocation partnership with Equinix
May 5th 2010
NYSE opens European liquidity center