Extranets for the Capital Markets: The Two Generations of Connectivity (Analyst Insight)

Introduction

Despite the global financial crisis and sharp economic downturn in the US and UK, there are a number of new entrants into the financial extranet market. Thus report looks at this space and surveys the competitive landscape to understand how it is evolving and where there are opportunities for technology vendors to win business as a result of this trend.

Scope

• Telcos, trading venues, content and application providers
• Automated trading

Highlights

The US is, if anything, already in a second or third wave in this process, the initial alternative trading venues there having been acquired by the incumbent exchanges in the middle of this decade, only for a new generation to emerge with names like DirectEdge and BATS.

Reasons to Purchase

• Gain an insight into how financial extranet technology is evolving.
• See who the new players coming into the market are and what they are bringing to the competitive environment.

Overview 1

• CATALYST 1
• SUMMARY 1
• OVUM VIEW 2
• INTRODUCTION 3
• LEGISLATION HAS PROVOKED FRAGMENTATION OF LIQUIDITY 5
• AUTOMATED TRADING ARISES IN RESPONSE, DRIVING DATA VOLUMES 5

Analysis 7

• BENEFITS OF COMMUNITY OF INTEREST EXTRANETS IS BASED ON SIZE 7
• THE VALUE OF SECOND-GENERATION EXTRANETS IS LOW LATENCY 8
• SOME COMMUNITY OF INTEREST EXTRANETS SEEK TO BE ONE-STOP-SHOPS 10
• COMPETITIVE LANDSCAPE 11
• COMMUNITIES OF INTEREST 11

BT 11

• NYSE Euronext 13
• Savvis 15
• IPC 15
• Orange 16
• Atrium Network 18
• QuantHouse 18

LOW-LATENCY CONNECTIVITY VENDORS 19

• Reliance Globalcom 19
• Exponential-e 21
• AboveNet 21

RECOMMENDATIONS 23

• Data center operators 23
• Content providers 23
• Application providers 23
• Monitoring and measurement vendors 23

APPENDIX 25

• DEFINITIONS 25
• METHODOLOGY 29
• FURTHER READING 29
• ASK THE ANALYST 29
• OVUM CONSULTING 30
• DISCLAIMER 30

List of Figures

• Figure 1: The generic concept of an extranet 3
• Figure 2: How a first-generation financial extranet works 4
• Figure 3: How a second-generation financial extranet works 9
• Figure 4: Ultra Access expands the Radianz offering to low latency 12
• Figure 5: The SFTI Network is in the US and Europe, with plans to expand to Asia-Pacific 14
• Figure 6: Orange touts its Layer-2 network with predefined routes for low latency 17
• Figure 7: Reliance Globalcom builds on the Yipes Ethernet connectivity service 20
• Figure 8: AboveNet says its direct fiber and reduced number of hope means low latency 22