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Executive Summary
Unique challenges exist whether networks connect data centers that are a few miles, or a few hundred miles, apart. A number of new solutions to the inter-data center problem are available now, thanks largely to Wall Street’s demand for connectivity services that meet the specific needs of individual firms. Big telecommunications providers and financial services-specific connectivity firms offer a variety of hands-on and hands-off services—everything from piecing together low-latency fiber-optic routes to selecting the most suitable end-point optical hardware. |
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Even so, firms whose scale and strategies require the lowest possible latency are often opting to purchase a private dark-fiber network, or a dedicated and managed fiber-optic connectivity solution. Choosing one of these private or dedicated approaches, however, does not mean that firms that opt for one of these approaches are left in the cold to fend for themselves. It’s not unusual for equipment providers, those whose hardware acts as the on and off ramps to the fiber-optic cables, to work with end users to configure the network, and even locate the fastest available fiber.
Looking ahead, the dividing line between data-center networking and optical networking is crumbling. Many trading firms already view the multiple data centers in New Jersey as one big virtual data center whose networks seamlessly move traffic between disparate servers with less than 100 microseconds of latency added by the jumps on and off the optical path. Some firms are even trying to remove routing hardware altogether by installing programmable FPGA chips whose sole purpose is to move market data into and out of the data center. Solutions such as these are specialized and will only ever meet the needs of a small subset of the financial services world; however the merging of intra-data center and inter-data center networking they demonstrate cannot be ignored.
Despite new innovations and the help made available by service and equipment providers, inter-data center network choices are not to be made lightly. Before making these decisions, firms must first know what they need in terms of latency and bandwidth to ensure the biggest return on investment. And once a solution is chosen it is crucial to understand how much support is required. Some homeowners do their own electrical work and others hire professionals—it’s about knowing your strengths and weaknesses and grasping the complexity of the problem at hand.
The TABB Group Vision Note Optical Networking for Capital Markets: The Bright Side of Dark Fiber is based on conversations with trading firms, optical equipment providers, telecommunications firms and high speed trading solution providers. The study provides a detailed description how fiber optic networks are used by financial services firms and potential pitfalls inherent in gaining access to and utilizing an optical network. Discussion centers on sources of latency, bandwidth usage, methods of accessing fiber optic networks and optical equipment providers. The study also provides estimates for optical connectivity spending by financial services firms.