Subsea Cable Route Woos U.S. Speed Traders to ASX FuturesEduard Gismatullin and Adam Haigh
U.S.-based high-frequency traders can buy and sell Australian equity futures two thousandths of a second faster after ASX Ltd. in Sydney opened a direct link to CME Group Inc. in Chicago.
The new route shaves 50 kilometers (31 miles) off the distance between ASX’s data center -- located less than 10 kilometers west of Sydney’s Harbour Bridge -- and CME in Aurora, Illinois, some 14,900 kilometers away, according to the operator of the Australian Securities Exchange. The subsea cable cuts the round trip for a computer signal to 181.5 milliseconds from 183.5 milliseconds, a service that benefits traders with strategies that rely on reacting to price moves more quickly than other investors.
“For certain instruments and certain clients, speed is still a major contribution factor to their business model,” Adam Bradley, head of sales for technical services at ASX, said in a telephone interview from Sydney. “Microseconds count to these customers. If you can reduce by milliseconds, you are certainly helping them.”
The new link gives U.S. firms faster access to stock-index futures, Australian debt and commodity products traded on ASX’s derivatives platform. The previous route had run to Equinix Inc.’s data center in Chicago before connecting to CME, the Sydney-based company said. Overseas customers account for as much as a quarter of activity on the ASX 24 futures market, according to ASX.
“This really presents a new business opportunity for us and lowers the barriers for firms wanting to get access to our market,” Bradley said. He declined to say how much it cost to build the faster link.
ASX also has direct connections to Singapore Exchange Ltd. and to Interxion’s data center in London.