12 Mar 2020

Connectivity as a Service: the art of being nimble

When the economic backdrop shifts, traders often need to adjust in a heartbeat

By Tony Jones, Global Relationship Director at BSO

Smart trading firms have long recognised the value of staying nimble. It can involve trying a new tactic, a new asset class or new geography.

It also can involve a firm’s network strategy.

Will international trade disputes escalate and hit the global economy? How haunting was the recent inversion of the U.S. yield curve? The Bank for International Settlements highlighted risks such as these in its latest bulletin. They are the sort of issues that often demand a complete rethink of a trading strategy.

Many trading firms respond to market uncertainty by designing savvy diversification strategies. Some firms build models that thrive on volatility. However, adapting to new conditions may sometimes have as much to do with how a firm manages its network as to how it manages its trading desk.

 

Adapt or die

The reason that networks matter so much is simple. At times of peak uncertainty, there is a real premium on flexibility. That extends to the network.

As a result, it is no surprise that Connectivity as a Service (CaaS) and software-defined networking (SDN) are gaining increasing attention amongst the financial markets community.

They both offer increased flexibility for trading firms. Connectivity as a Service allows firms to connect more easily and quickly to new venues.  SDN lets them choose new network routes without physical changes.

 

A massive SDN market

Last year, the global SDN market was estimated to be slightly less than $9 billion. By 2023, it is forecast to reach nearly $29 billion. That is a stunningly fast rate of growth. It underlines just how radically SDN is changing the network space.

KPMG, citing data from a networking survey, recently noted how SDN sits at the top of the priority list for executives who are actively researching new network capabilities.

 

SaaS & innovation

SDN holds promise for trading firms of any size. But Connectivity as a Service has particular appeal for firms that are relatively young and want a network strategy that can scale.

Consultancy Oliver Wyman pointed out in one white paper the following benefits for firms

  • No upfront investment in infrastructure
  • No long-term contracts
  • Specialised network expertise is not needed.

All of this means that Connectivity as a Service enables firms to focus more on innovation.

 

The network footprint is key

It’s also worth noting that the value of SDN and Connectivity as a Service can increase based on the footprint of the network provider.

The whole point of having fast, efficient and seamless connectivity is to have as wide an array of options as possible. If firms want to be able to change their trading strategies quickly, they need network providers that are truly global and have the largest numbers of connections.

BSO connects to more than one hundred data centres in 23 countries around the world. So, we’re confident that the network options we provide our clients will offer the flexibility they will need – whenever markets start to gyrate.

No one knows what the global economy or the markets are about to do next. But it’s a pretty safe bet that whenever the next major upheavals come, the firms with the most flexibility will be among the most successful.

 

If we can help you with your network, please speak with our experts today. 

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