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1. Latency – What does it mean for your
infrastructure and business
Article by Nilesh Rane
 Datacenter
What matters in networking is the speed at which data is sent or received. In a dynamic business
environment, where speed is the essence, mission critical systems and applications need greater
bandwidth, throughput and capacity. While we can see examples of this in data intensive sectors
like trading, stockbroking, capital markets, and media, the other industry sectors are not far
behind and can definitely benefit from improved wide-area network performance. This holds
true in the case where the WAN connects multiple sites or links the man office to the data
center. In situations such as these, a fast and reliable network link not only ensures overall
system performance but also assures quick recovery in an exigency that may require failover.
Closer Links For Better Connectivity
The financial sector and in particular brokerages and trading/stock exchanges, were the first to
adopt ultra high-speed networking. In a trading/stock exchange, speed to transact is what
matters and a few milliseconds can make all the difference. Over the past decade brokerages and

2. stock exchanges have spent millions in networks infra i.e., faster servers and Gigabit Ethernet
infrastructure to score an edge over their competitors.
The TABB Group, a financial consultancy, recently surveyed CTO’s at several financial firms,
and found that reducing latency and expanding network were some of their top priorities. Other
key areas for consideration included improving the use of data center space and colocation. The
report also found that proximity to the local exchange (48%), space for expansion (33%),
reliable power supply (29%) and cost (57%) were some of the key drivers behind the choice of a
data center by brokerage and trading/stock exchanges.
The findings reflect the sentiment among most CTOs in other industry verticals as well. Key
priority areas include transparent network, performance, lower cost, scalable and reliable data
center hosting options.
Colocation As An Option
Reducing the distance between two sites has often been employed as a measure by organizations
to improve network performance between them. This is probably the reason why brokerages and
exchanges look for data centers close to financial centers and in some cases, within the stock
exchanges.
A case in point here is Thomson Reuters. In 2010, Thomson Reuters launched Elektron, a
real-time network and hosting environment, to meet strong demand for fast and cost-effective
access to the emerging cash equities market in India. Elektron enables hedge funds, asset
managers, banks, brokerage houses, exchanges and other participants to connect to the
world’s largest financial community and securely reach trading partners over the network
globally.
This global service needed an ultra-high speed, low latency network and hosting environment
that was carrier neutral, and had proximity to Bombay Stock Exchange (BSE) to help financial
firms access and share information faster and cost effectively. Being the first company to
launch such a service in India, Thomson Reuters needed a highly available IT environment for

3. Elektron. In a fast paced trading environment where decisions are made on a fly, a few
seconds of down time could result in potential monetary loss to its clients and
customers. Hence, Thomson Reuters chose Netmagic’s datacenter located within the Bombay
Stock Exchange (BSE) to host Elektron. Netmagic’s colocation hosting facility at Bombay Stock
Exchange (BSE) ensured low latency and enabled high frequency trading for Thomson
Reuters’ customers.
Being hosted close to/within data centers in financial centers, though a desirable option for
most financial institutions creates shortage of space, leads to a strain on power supply and
increases costs over a long term. With limited space and resources available within these
facilities, colocating to a data center close to financial centers puts a strain on these facilities.
Making use of newer and faster networks can solve this problem of overcrowding and also lead
to enhanced performance.
Enhancing Performance, Reducing Latency With High
Speed Networks
40/100 GB networking standard was introduced in 2010 and the first roll out of the 40/100 GB
infrastructures is currently going on. This is an advancement over the conventional Gigabit and
10GB network links that reduce the network latency to less than 2msec even over distances of
100 miles or more.
Using a higher speed 40/100 GB infrastructures has its own advantages. The first one is
reducing latency, which essentially means faster and error free data processing – one of the key
requirements of the financial sector.
Secondly, a high network speed is able to support recurrent, periodic bursts of data generated by
data intensive applications. If the rate at which the data is generated exceeds the capacity of the
network link to accommodate the excess at any given point of time, queuing of data happens
leading to unwanted delays and system crashes. A higher speed 40/100 GB link ensures that the
network capacity always exceeds the maximum data burst rate and the network remains
congestion free assuring seamless flow of data without any delays.

4. Thirdly, a high-speed infrastructure also helps financial institutions to spread their data center
footprint rather than limiting themselves to locations closer to stock exchanges or their head
offices.
Colocation It Is
A high-speed network infrastructure reduces latency; hence, proximity of data center does not
matter. Organizations can benefit from lower costs for space and power while still being able to
ensure performance for data intensive, mission critical applications.
The Jones Lang LaSalle Data Centre Barometer of Autumn 2013 found that power continues to
be the most important factor in choosing a new data center, with over half of respondents
ranking availability of power as their absolute priority.
A low latency data center interconnect can significantly improve international data traffic and
organizations can benefit from shortened data transit times and improved network performance
and robustness. This in turn leads to increased performance, reduced costs, a wider range of
colocation options, a scalable infrastructure and efficient use of power for growth.