Technology infrastructure is what powers trading. High frequency traders, hedge funds and investment banks all rely on data networks to quickly, efficiently and reliably carry their transactions immediately to major liquidity hubs and market exchange points. The ultimate ultra-low latency solution is a direct network connection across the shortest path which delivers data the quickest. By leveraging ultra-low latency connections, trading organisations can execute advanced arbitrage strategies, access greater liquidity and win millions of dollars in revenue.

Ultra-low latency connectivity enables market growth
In August 2011, Perseus Telecom announced the implementation of the fastest available trading connection between BM&F Bovespa and NASDAQ. The solution was implemented in partnership with GlobeNet, an international wholesale provider of submarine capacity and a wholly owned subsidiary of Oi. The new low latency path was developed by making physical and technological improvements to the existing fibre path. An investment of time in research and development identified opportunities to construct new fibre along the terrestrial fibre path as well as make necessary engineering changes on the submarine system, shaving a full two milliseconds from the former fastest route. The new connection between NASDAQ and BM&F Bovespa represents a milestone in achieving ultra-low latency network capacity to the growing trading community in LatAm, thus providing the fastest trading connection from the US to Sao Paolo and BM&F Bovespa.

Customers can now access low latency capacity to Brazil from other key global exchanges on the Perseus network, including CME, NYSE, BATS, LSE, Deutsche Borse, Eurex and beyond. The ultimate goal is to ensure guaranteed, ultra-low latency between major liquidity hubs and financial exchanges for buyers to connect and execute their trades. Global access to liquidity is contingent on overcoming regulatory obstacles at the outset, then dealing with challenges of geographical connectivity. When an exchange owner opens to global participants, the risk to those participants is the domestic competition, usually in direct proximity to the exchange matching host. Low latency connectivity helps global participants overcome this domestic advantage.

BM&F Bovespa is considered one of the largest exchanges in the world. In December 2011, the exchange had a market capitalisation of $1.54trn. Shortly after Perseus’ August 4, 2011 announcement that it had implemented the fastest connection between BM&F Bovespa and the US, on August 17, 2011, the exchange saw the biggest traded volume in its history, with a volume of $14.8bn. As one of the world’s major trading facilities becomes more accessible, opportunities for companies to trade beyond traditional borders have been vastly improved.

Latin American market competition heats up
The financial services industry has had to push the limits of technology in order to enable cross-border growth. Companies in the financial sector rely on a solid network foundation to conduct business – whether accessing market data for analysis, algorithmic trading or simply connecting to clearinghouses and exchanges themselves. The fastest connection provides market participants with best execution, market opportunities (arbitrage etc.) and mitigation of risk due to speed of matching and clearing. Network solutions don’t just drive transactions — they enable entire marketplaces.

Latin America is unquestionably a growing and leading financial hub. Solutions such as Perseus Telecom’s are driving this growth by delivering ultra-low latency connectivity. These connections end at major exchange points like BM&F BOVESPA and drive the interest of expansion of other players to the market. In November 2011, Direct Edge, a private exchange operator that has had success in competing with the NYSE and Nasdaq in the New York metro region, announced its plans to open an exchange in Brazil to challenge the incumbent BM&F BOVESPA. Direct Edge’s goal is to take advantage of Brazil’s fast-growing financial markets and open regulatory framework.

Regardless of the outcome, competition is surely on the horizon as can be seen in Sao Paolo. Direct Edge is not the first competitor to enter the market. BATS and a local partner, Claritas, have announced plans to open an exchange in Brazil. Each exchange plans to take on the incumbent – the third largest exchange operator in the world – aiming to disrupt what is considered fair market trading practices. According to Direct Edge’s Chief Executive William O’Brien, “There’s a pretty wide disparity between the fees BM&F Bovespa charges traders relative to other national markets.”

Drivers and hurdles
As the competition heats up in Sao Paolo, more companies will require reliable and secure connectivity to the region and of course the lowest latency possible. Leading the pack by implementing the fastest trading connection to Sao Paolo, Perseus has invested in constructing and engineering the most direct network connections specifically to serve the financial sector.

This deep market understanding, combined with anticipating the industry’s needs and growth areas, makes Perseus the ideal network partner for the financial services industry.

Its network is built with a deep understanding of trading applications and clients’ respective business models, combined with anticipating the industry’s needs and growth areas. With fully secure and dedicated network solutions, customers can be assured they receive the guaranteed service levels they require. Furthermore, Perseus assures network security whether it is Layer 1, Ethernet or SDH / SONET and offers capacity up to 10Gbps. Perseus is driven by customers’ requirements to develop a global network, including new LatAm destinations in progress today: Bolsa Mexicano, Mexico, Santiago Stock Exchange, Chile and the Colombia Stock Exchange.

Implementing, managing and ensuring the fastest connection to any given market is a challenge. Perseus solves customers’ regulatory requirements on physical network performance by providing secure redundant connections and reliable uptime, which assists compliance with best execution and data security. Overcoming traditional network obstacles is a challenge that Perseus takes on in its network design solutions; however, speed alone does not equate to success. For instance, Sao Paolo’s new market entrants are now challenged with finding a clearinghouse – since BM&F Bovespa, which owns the CLBC clearinghouse, is not likely to lend its infrastructure to competitors. As the global specialist low latency provider, Perseus is constructing not just ultra-low latency solutions, but a better way for financial companies to connect for success. Perseus is a network partner with vision that can deliver the specific solution you need.