To be truly competitive in the global capital markets, companies need to have high-speed, latency-sensitive connections to ensure fast and reliable trading.Instead of setting up your own private networks with customers, you can use a financial extranet: a well-connected network of thousands of capital market participants such as buy-side firms, sell-side firms, inter-dealer brokers, liquidity venues, independent software vendors and market data providers.
A financial extranet consists of an elaborate network of data points, also known as points of presence (PoPs), which are linked via secure, reliable and scalable high-speed leased lines. Often, you can even choose the type of infrastructure that best aligns your needs: a secure Internet connection, Ethernet connectivity or other types of leased lines. These network circuits ensure a latency-sensitive point-to-point connection and can cater to your company’s growth when extra bandwidth is needed. The fastest connection, however, is achieved through wireless connectivity. This type of airborne transmission beats fibre connections in speed any day, ensuring the lowest latency possible.
A financial extranet will give you access to a network of buy- and sell-side firms, trading venues, market data vendors and clearing services from around the globe. Think about what that can mean for your business: to gain access to a whole new range of internationally connected customers.
Instead of spending weeks to set up a private point-to-point connection, you will deliver your services to new customers in days which will not only save valuable time but prove to be very cost efficient. A faster delivery time of your services means satisfied customers, more revenue and more time to focus on what is truly important for your line of business: to market your product. Customers belonging to the same financial extranet know they will save time, money and resources if they will use your services. This will make your offer all the more beneficial for them. On top of that, you won’t have to worry about designing or maintaining the network infrastructure and you can count on an external party to fix any service or network problems you may encounter.
In short, a financial extranet is just what financial service providers, who want to grow their business, need. But, one should be wary as to which financial community they want to subscribe to. Nowadays there are dozens of financial networks to choose from, all different in geographical focus, reach and infrastructural capabilities. As with almost every business, there are sizable market leaders that might have the largest reach in terms of number of participants, but compromise in terms of quality of connections and customer service. Getting access to the community of these financial network giants can prove to be a very costly and tedious affair. Financial service providers that operate in a niche environment or are relatively new to the market might find it more rewarding to get connected to a specialised financial extranet that allows you to enlarge your distribution network in a cost-efficient, fast and flexible way.
A more specialised financial network provider will make sure to understand your business needs and will think together with you on how to best set up a connectivity solution for your company. Additionally, you can trust that the provisioning process is taken care of quickly and that pricing for your high-speed connectivity will be fair and transparent.
The author, Willem Lambrechts is Managing Director at Drebbel.