Democratizing RF for capital markets

Recently at BSO, we’ve noted a significant upsurge in interest - from both existing and prospective clients - into how they can use our RF (radio frequency) networks to trade on the New Jersey equities triangle (ICE/NYSE Mahwah - NASDAQ Carteret - CBOE Secaucus), for the Chicago derivatives markets and between TMX Markham - NASDAQ Canada (Equinix TR2).

For the New Jersey Triangle, BSO has been delivering RF for some time, which has developed into the leading ultra-low latency solution in the market.

Traditionally, the use of RF networks for market data and executions was only available to the top tier high frequency trading (HFT) firms. However, that situation is now changing, as a new landscape of RF users is developing. 

At BSO, we see three audiences for our RF products. The first is the tier one HFTs, whose strategies are based upon arbitrage, where ultimately, the lowest latency wins. BSO has the top HFTs in the world as clients, and we’ve been serving them for some time.

The second tier is an amalgam of market data vendors, algorithmic trading firms and systematic hedge funds, which generally don't have the same level of dedicated infrastructure as the tier one HFTs. This second tier may use a mix of dedicated or shared RF bandwidth, typically at 50Mbps point-to-point in the metro areas and 2-4Mbps for longer-haul routes. 

The third subset of players, which have only started looking at this in the last two or three years, is the wider audience of prime brokers, tier one/tier two banks, and other firms looking to use RF for executions, such as executing brokers. Realizing that they are leaking revenue to more nimble firms who can execute faster than them, and not wishing to get squeezed on the market because they can’t execute their clients’ orders ahead of their competitors, these firms are also now starting to adopt RF networks.

BSO’s RF service, both for the New Jersey triangle and between ICE and CME in Chicago, is targeted at all three of those subsectors: the lowest latency market makers and HFTs; other algo trading firms that want the fastest raw market data but might execute over fibre; and banks and brokers using RF mainly for executions. Additionally, for those firms that don’t need their own dedicated links, BSO now offers a product called Share RF. We can also bundle other products and services into the offering, such as data centre colocation and proximity hosting, for sourcing market data and handling executions locally. 

Removing the barriers

Clients inexperienced in RF, who need help when deploying these kinds of infrastructures, can be confident that BSO removes the barrier of complexities and technicalities that RF can induce in a trading environment, and makes everything seamless for them when migrating to RF from the pure Ethernet fibre that they're more familiar with. In short, we are democratising the use of RF, by making it viable for firms who aren’t tier one HFTs.

Looking ahead, we expect to start seeing demand for RF in the crypto and digital assets space in the not-too-distant future. BSO is already well placed to service that market, with our strategic locations across the existing financial markets, our cloud gateways, and our CryptoConnect product for low latency crypto trading.

In conclusion, for any firm looking at leveraging RF for trading, it is essential to work with a vendor who's well versed in that space and who's constantly working on improving latency and increasing capacity. A vendor such as BSO.