Feeding Collocation Hunger, Equinix Ramps Up in Secaucus
Direct Edge and CBOE sign on to N.Y. metro area's largest data center
March 2, 2009
Behind the façade of a non-descript building in an industrial area of Secaucus, N.J. is a response from Equinix to the electronic trading community's seemingly insatiable demand for collocation services.
In fact, Equinix is in the process of expanding the Secaucus data center--already the largest in the New York metropolitan area--as it prepares for an influx of cost-sensitive financial firms and trading venue clients such as Direct Edge and, as Securities Industry News has learned, the Chicago Board Options Exchange's forthcoming East Coast platform.
The facility, dubbed NY4, opened in late 2007 and is designed specifically for the e-trading business, "with the security and quality" that entails, said John Knuff, Equinix's director of global business development. Knuff, who joined Foster City, Calif.-based Equinix in mid-2007, was previously responsible for global infrastructure at trading technology provider Nyfix.
Inside, NY4 is kept at 68 degrees, cool enough for staff and visitors to need jackets but perfect for the networking equipment and servers inside the rows of cages that stretch across the 975-foot-long building. According to an Equinix spokesperson, Equinix will by May add 40,000 square feet of collocation space and 1,100 cabinets to its existing 1,700--and will bring the company's investment in the site to $200 million. A third--and final--phase of expansion has yet to be scheduled.
With more and more firms looking to transplant their technology to off-site facilities operated by third parties, industry observers say Equinix should have no difficulty filling up NY4. Kevin McPartland, senior analyst with Tabb Group in New York, pointed to a shortage of available data center space. "It sounds counterintuitive in the tough climate we're in," he said, but "building your own is pretty expensive, and it's actually more cost-efficient to go to a shared services facility."
Sang Lee, managing partner of Boston-based Aite Group, called Equinix "well positioned" for growing demand, citing its "huge presence" in Chicago and locations in the top-ten financial centers around the world. "The trend in the market is increasingly toward low latency," said Lee. "Everyone knows that in order to shave off milliseconds or microseconds the best way is to collocate." He added, "If you have good real estate in these financial centers, chances are you are going to get good usage out of them."
But latency is far from the only factor firms consider, noted McPartland. Although they view speed as important, a growing contingent say the priority is not "cutting down 500 microseconds, or paying considerable extra money to shave off microseconds here or there," he said. "Things like power and cooling are actually much bigger concerns when looking for data center space."
Carrier-Neutral
Unlike collocation providers such as Verizon, Level3 Communications and AT&T, Equinix does not have its own global network. Knuff noted that exchanges recognize their health is based on order flow, which arrives via various networks and carriers. Facilities like NY4 offer a neutral space where competing carriers can interconnect with each other and continue serving customers, he added.
NY4 does not want to be "everyone's data center," said Knuff. "There's no way we could host every single server and network for the whole financial industry. We don't compete with network providers and don't have our own financial extranet. We go out and attract market data providers and the extranets as well as the carriers."
