Playing Host

Hong Kong Exchanges and Clearing Limited’s Jonathan Leung unveils their plans for new hosting services in Hong Kong.

Jonathan Leung_Mar 11Hong Kong Exchanges and Clearing Limited (HKEx) recently announced plans to open a Tier 4 data center to address both its internal IT requirements and demand for hosting services from the Exchange Participants. Because HKEx was formed by a merger of the Stock Exchange of Hong Kong and the Hong Kong Futures Exchange, it has had to manage a variety of market systems and each organization has had a primary and secondary data center located in different parts of Hong Kong. With its Next Generation Data Center, HKEx will be able to consolidate its IT systems, resulting in further improvements in the systems and better utilization of resources.

The new data center will be a purpose built facility, giving HKEx full flexibility to custom design the electrical and mechanical infrastructure to provide the highest redundancy and reliability. One of the main features of the design is the ability to support higher power density. Today’s trading firms are demanding higher and higher power density for their systems. The average power density, not only in Hong Kong, but globally is about 3kW, while HKEx’s new facility is designed to support an average of 6kW. The construction has already been started and HKEx plans to launch its hosting service towards the end of 2012.

HKEx is aiming for LEED Gold Certification so the multistory facility has been designed with green initiatives in mind, including special features like floor plans that maximize the use of daylight and storm water cycling for irrigation. HKEx’s goal is the highest energy efficiency and sustainability without compromising reliability.

If the new centre opens in 2012, what will be its maximum capacity and when do you expect it to reach that level?
We are still in the design phase for the interior, but our plan is to offer services at the hosting site in Q4 2012. The full capacity of around 1200 racks will be developed in phases. In the first phase, we will be able to support around 400 racks located in a common hall and private cages. To ensure fairness to all hosting customers, there will be a special design in the structured cabling system to provide the same latency access to our market systems no matter where a rack is located. We will monitor the site usage and develop further capacity accordingly.

Who will be the primary firms to utilize this facility?
Exchange Participants, information vendors, technology solution vendors, connectivity providers and telecom service providers are all our target users. They together will form an ecosystem which will make our hosting services more valuable to all the Exchange Participants. Our strategy is to provide a world class hosting facility and work with partners to provide enhanced services to our users. We welcome all categories of Exchange Participants. How they will use the services at our new data center will really be dependent on their business model and trading strategy. It is not about the size of the firm.

How will additional hosted services affect the role of High Frequency Trading (HFT) in Hong Kong markets?
With low latency access to our platforms, our Exchange Participants will have higher flexibility in  their trading strategy. Low latency itself is not equivalent to HFT. There are many factors our Exchange Participants will consider when deciding whether to use the services offered at the new data center. In the end, however, it is really up to the Exchange Participants to determine their business  strategy; our role is to provide a platform to address different requirements in the market.

Will there be additional hosted services offered by HKEx in the next year?
We are in the process of discussing with different potential partners ways to enrich our hosting services. We welcome input from all interested partners. Cloud computing applications are among our considerations. We are also in the process of upgrading our trading systems and other market systems. Our cash market will migrate to AMS/3.8, the new version of the current trading facility, by Q4 2012, and there will be new versions of the clearing and market data systems. On the derivatives side, the hardware and software upgrade that was started in Q4 2010 is scheduled to be completed in the middle of this year. There are also plans for next generation systems for both markets, but there is no timetable yet.

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