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Nasdaq's Co-location Business To Be Regulated By The SEC

Tyler Durden's picture




 

A major component of HFT, server co-location, is now becoming a critical regulatory hot topic. The SEC has told the Nasdaq it will regulate its co-location business going forward. This is occurring even as the SEC is furiously googling terms like co-location and high frequency trading, and watching riveting debates between Michelle Caruso Cabrera and Bob Pisani, to find out just what they mean, and what exactly it is they are supposed to be regulating.

From Traders Magazine

"We have been asked by the SEC and consented to--indeed embraced--their regulation of our co-location business," Eric Noll, a Nasdaq executive vice president in charge of transaction services, told Traders Magazine. "Their goal is to make sure that access to our marketplace is fair. That is also our goal."

Of course, Nasdaq shares some spirited support of co-location, which Mr. Noll forgets to add is a major revenue stream for exchanges:

"Co-location is not going away," Noll added. "But the way the market is evolving is positive. Exchanges are providing it and it's regulated and access is fair."

And just in case the SEC atually wants to figure out what it is that is is supposed to be regulating, here

Co-location is a service offered by market centers and third parties, such as Equinix, that involves making rack space available to firms for their trading servers in facilities near market centers' matching engines. Placing one's trading server nearer to an exchange matching engine reduces communication times, increasing the chances of beating competitors to profitable trading opportunities.

Many of these data centers are in New Jersey where NYSE Euronext is building a 400,000 square foot facility for co-location purposes.

Because of the perception of unfairness, some in the industry have argued more transparency into the allocation practices of exchanges's co-location business is warranted.

Zero Hedge is still waiting for the NYSE's release of its co-location terms as was disclosed to us some time ago. It would be useful to have a benchmark for retail investors of just how much it would cost them to be competitive with the GETCO's and the Goldman Saches of the world, especially now that the cost-benefits of trading on dark pools may be shifting back to open exchanges.

 

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Thu, 10/22/2009 - 15:34 | 107196 Cheeky Bastard
Cheeky Bastard's picture

stop with the goddamn regulation and just kill the mofo once already .... goddamn ...

Thu, 10/22/2009 - 15:35 | 107200 Gubbmint Cheese
Gubbmint Cheese's picture

whats got the markets going all mental? is there anything I've missed besides the usual bull that is...
gc

Thu, 10/22/2009 - 15:42 | 107208 koaj
koaj's picture

Bove put out a buy on WFC this morning

Thu, 10/22/2009 - 16:02 | 107244 gmrpeabody
gmrpeabody's picture

+1

Thu, 10/22/2009 - 15:46 | 107214 Careless Whisper
Careless Whisper's picture

GC there's no point in trying to figure out WHY. It defies logic. Just go with the flow for a good intra-day trade. I hope you don't hold any overnights. Look at PNC, ACF, HOV today --- why you ask? I am clueless.

Thu, 10/22/2009 - 22:42 | 107797 Anonymous
Anonymous's picture

Wake up ! It's going higher. Sorry.

Thu, 10/22/2009 - 15:35 | 107201 Careless Whisper
Careless Whisper's picture

correction: Protected by the SEC

Thu, 10/22/2009 - 19:47 | 107592 Benthamite
Benthamite's picture

I saw the title of the article and immediately thought the same thing... well maybe not "protected," but no change to current operations.  

Thu, 10/22/2009 - 16:03 | 107246 bugs_
bugs_'s picture

What is this "regulation"?

Thu, 10/22/2009 - 16:34 | 107282 NYPoke
NYPoke's picture

It requires lots of fiber and isn't always pleasant when it does its job.

Fri, 10/23/2009 - 01:01 | 107926 Hephasteus
Hephasteus's picture

That's where you keep doing something illegal, imoral and wrong but you keep competition for it down so it's just a 'little" destructive.

It's weird. The internet has "dark fibers".

http://www.wired.com/epicenter/2009/10/youtube-bandwidth/

Thu, 10/22/2009 - 16:13 | 107260 Anonymous
Anonymous's picture

Instead of the usual intellectual overlode, Tits Cabrera gave us the stretched to the breaking point cotton weave overlode. The SEC will never regulate anything until they get that sartorial mammary mess in hand. Can't they put her in a jacket at last?

Thu, 10/22/2009 - 16:33 | 107281 ZeroPower
ZeroPower's picture

watching riveting debates between Michelle Caruso Cabrera and Bob Pisani,

 

Dont forget the buffon kneale (still loling about his idiotic 'input' with the Cali AG)

Thu, 10/22/2009 - 16:50 | 107308 Assetman
Assetman's picture

You might not know this, but... Michelle Caruso-Cabrera's "rack space" is also co-located by Equinix in an undisclosed data center in New Jersey.

Thu, 10/22/2009 - 16:52 | 107310 Careless Whisper
Careless Whisper's picture

You're vulnerable, you're vulnerable

You are not a robot...

http://www.youtube.com/watch?v=S_oMD6-6q5Y

I give good link.

Thu, 10/22/2009 - 16:56 | 107316 Ducky
Ducky's picture

co-location press release yesterday

http://finance.yahoo.com/news/CORRECTING-and-REPLACING-bw-1047857929.html?x=0&.v=2

Telx , one of the largest domestic interconnection and colocation data center operators, announced today electronic trading networks and managed services leader 7ticks will expand its presence in Telx’s facility at 350 East Cermak Road in downtown Chicago. The expansion is part of an ongoing effort by Telx and 7ticks to connect the capital markets communities to offer greater opportunities for proprietary trading groups, brokers, and hedge fund managers to gain direct exchange access through proximity hosting. The companies also strive to provide capital market customers a competitive advantage through the lowest latency network connectivity and best possible routing available on the market today. The expansion gives 7ticks additional colocation space and expands the reach of 7ticks direct exchange access to such exchanges as the CME Group and the Intercontinental Exchange (ICE). Existing Telx customers at the Chicago location will now be able to easily and directly connect into 7ticks’ growing worldwide network.

Thu, 10/22/2009 - 18:35 | 107488 Anonymous
Anonymous's picture

Michela Caruso Cabrerra is not human

Thu, 10/22/2009 - 18:36 | 107489 Anonymous
Anonymous's picture

Michele Caruso Cabrerra needs to get laid

Thu, 10/22/2009 - 20:53 | 107660 Cognitive Dissonance
Cognitive Dissonance's picture

"We have been asked by the SEC and consented to--indeed embraced--their regulation of our co-location business," Eric Noll, a Nasdaq executive vice president in charge of transaction services, told Traders Magazine.

Any time I'm embraced by someone from Wall Street, I imediately check that my wallet, watch and the family jewels are still where they belong.

Thu, 10/22/2009 - 21:18 | 107691 Zippyin Annapolis
Zippyin Annapolis's picture

Revenge for the Chuckie and Duncan shit show--more to come!

Sun, 12/06/2009 - 00:08 | 154247 Anonymous
Anonymous's picture

Does anybody knows how much does it cost to get 1U space at these colocation?

Mon, 11/08/2010 - 03:25 | 707686 aaliyah
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The true purpose of a Business is to SERVE a client... who in turn creates more customers based on the quality and efficiency of the services provided.So on a scale that matches the new online marketing paradigm shift word of mouth marketing has evolved to twitter of mouth, Facebook of mouth, article of mouth and viral online sharing of mouth marketing. change of address checklist Great checklist to help you remember all the places you need to provide your new address to after you move.

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