The trading network business is a dynamic and competitive space where trading clients’ profitability is directly linked to the performance of the firms that connect them to the markets they trade.
For connectivity providers, the challenge is ensuring clients can trade as many markets as possible as quickly and securely as possible. This requires continual innovation: to open up new markets, to cut the latency of trading these markets and to edge towards 100% reliability.
BSO’s demonstration of these qualities in 2020 secured the firm the FOW International Connectivity Provider of the Year award.
Michael Ourabah, chief executive and founder, was concise in his analysis of the sector in which his firm excels:
“This is an extremely competitive business. We all know that trading firms, whether buy-side or sell-side are looking for the best infrastructure to support their core trading business.”
In a year of innovation, two recent highlights for BSO were the launch in October of its new ultra low latency network between London and South Africa, allowing trading firms to have the fastest route to the South African exchange.
BSO also partnered in December with Australia-based network provider Superloop to provide the underlying fibre optic infrastructure to support new ultra-high capacity DWDM across an initial four Singapore major hubs.
BSO distinguished itself in 2020 by working hard in the field of Radio Frequency (RF) technology, another technique for delivering ultra-low latency connectivity.
“RF technology has been with us for quite some time now. There are the prop and algo-trading firms that are on the bleeding edge of these technologies to get the edge to win but adoption by the more mainstream financial and capital markets communities is usually a lot slower.”
The BSO chief continued:
“As the technology matures, you need to develop additional value-added services and intellectual property software on top of the RF product to ensure that more traditional tier one banks, brokers, market data providers can benefit from this technology because it can obviously not be used as a replacement of fibre connectivity.
Ourabah said the firm tested the technology in the New Jersey triangle between the three major US equity exchanges – NYSE, Nasdaq and Cboe – and more recently deployed RF elsewhere, namely Chicago metro between CME and ICE, and the Toronto metro area between TMX and Nasdaq Canada.
BSO launched in October a new RF route for firms trading on the Toronto Stock Exchange (TSX) and Nasdaq CXC, using its RF network to connect TMX Group’s colocation data centre with carrier-neutral Equinix Toronto TR2 to provide the international financial community with the fastest way to trade between these exchanges.
“We have plenty of other projects ongoing leveraging this RF Technology, not only millimetre wave, where we have been operating for a while, but also microwave in projects in other regions in the world where we believe there is significant potential for adoption.”
In line with its commitment to innovation, BSO is also working hard to help firms, including tier one investment banks, trade digital assets such as crypto-currencies.
“For cryptocurrencies and crypto-exchanges lying inside the public cloud, to connect to these matching engines, traditionally you would just run a VPN over the internet and place your orders. This is a complete no-no when it comes to a tier one bank because their regulator insists that no matter what they need to be able to clear their positions. So if you rely on the internet to clear your positions, you are failing and therefore in breach.”
Enabling tier one banks and asset managers to trade crypto-currencies securely is one of the main challenges faced by the digital asset markets.
“This is why we have been working hard in the last few years to develop a product that can support and give access from any of the exiting liquidity venues in the traditional capital markets, whether exchanges or data centres where there are plenty of different engines or OTC trading is happening.
“So we provide customers with a port in these data centres, so that is a cross connect switch, and we guarantee them access to the crypto-exchanges into the public cloud provider via the on-ramps we have in all the different regions on all the various public cloud providers.”
BSO developed in December a bespoke ultra low latency cloud connectivity solution for CryptoStruct, the Hamburg-based crypto-currency trading firm, enabling professional trading companies, market makers, banks, and investment funds to develop, test, and run automated trading strategies for cryptocurrencies and derivatives.
Looking ahead to 2021, Ourabah is clear on his objectives:
“If we look back over the past three years, we embarked a journey where we started M&A in 2017 with two acquisitions and a third acquisition in 2019. It took us three years to swallow and digest these acquisitions, so 2021 is going to be a year where we are going to consolidate our leadership in the market, both in terms of fibre and RF connectivity, and create additional value-added services on these underlying infrastructure sub-sets that can widen our coverage and depth in the market.”
The BSO chief executive and founder said he is keen to revisit the opportunities presented by acquisitions.
“We feel we are in a pretty good position so we are going to continue on that journey whilst investing in new locations, new venues and expanding into new geographies and new emerging markets as trading firms demand more proximity trading into these new emerging markets.”
Ourabah also said his firm will continue to support trading firms as they explore new geographic liquidity centres:
“They can see alpha is becoming complicated in established markets because there is a lot of competition but when you combine these with new venues that are underserved and under-traded then you can find these trading opportunities.”
To view, the full interview with Michael Ourabah, click here: https://youtu.be/PXrJWMi8uvc.
The original article was published here.