FCM360 White Paper: How FX Brokers use Colocation to Cut Latency, Improve Execution, Boost Profits

Small FX traders get access to low latency trading

Will US Regulation drive new FX traders offshore?

Micro POPs put Asia, Africa in the FX game

Jan 16, 2014, 12:50 ET from FCM360

NEW YORK, Jan. 16, 2014 /PRNewswire/ -- A new FCM360 white paper, Prime Time for Foreign Exchange (FX) Colocation, offers a comprehensive look into how colocation has made Foreign Exchange one of the most profitable asset classes for global financial firms.  

The FCM360 White Paper provides excellent background on colocation and its evolution – from equities to foreign exchange, its current implementation, and its future.

FCM360 provides colocation and related infrastructure strategy and services for high-speed, low-latency FX trading.

For a complete White Paper visit: http://www.fcm360.com/fcm360-articles/premium-articles/primetime-for-foreign-exchange-fx-colocation/

Colocation calls for locating servers and algorithms as close to the markets as possible to minimize latency between trading decision, execution and clearance. It is taking off among Foreign Exchange traders and is giving individual and small institutional FX traders the same market access formerly reserved for big international financial institutions.

Jubin Pejman, FCM360 founder and managing director, observes, "With smaller brokers and traders now engaged in FX trading, colocation needs to be more broadly available at the major data centers." 

While the data facilities offer basic "rack and stack" services, they do not provide IT staffing and hardware support, leaving the new breed of FX players to rely on companies such as FCM360 for turnkey colocation strategies and solutions.

Originating in high-frequency equities trading, colocation now delivers connectivity and proximity hosting, automated trading, algorithmic trading and exchange connectivity to FX brokers, liquidity providers, traders and exchanges.

FX trading firms routinely locate just outside New York City, in New Jersey, (NY4) and just outside London (LD4) for proximity to the majority of electronics crossing networks (ECNs) and international FX bank liquidity pools.

Micro POPs – With FX trading centers expanding in Europe and Asia, technology leaders have pioneered a less costly and more successful methodology to achieve colocation using Micro POPs to reduce the cost of establishing a Point of Presence. Since the inception of Micro POPs, demand has grown among FX brokers and liquidity aggregators who can now obtain a point of presence in Hong Kong, Beijing or Tokyo and other trading centers without in-house IT management or capital investment.

FCM360's Pejman notes,"While the future role of regulators is uncertain, growing reliance on algorithms and low latency trading strategies will foster steady expansion of colocation. For those who do not rely on algorithms, colocation with all liquidity pools in a single data center, lowers execution latency making it widely appealing to the entire international FX community." 

Note to Editors: Jubin Pejman is available for interviews on how colocation impacts the Foreign Exchange (FX) industry. Contact: Dick Pirozzolo 617-959-4613 or dick@pirozzolo.com

FCM360 (http://www.fcm360.com) is the financial systems infrastructure strategy & implementation company. Services include proximity hosting for high-frequency trading, low-latency trading, automated trading, algorithmic trading and exchange connectivity.