Financial sector managed services provider CFN Services today announced the pricing structure of what the firm considers to be an affordable enterprise connectivity solution.
TradingHUB, launched last month, is a cloud-based connectivity solution which is aimed at providing a low-latency environment in which to join market participants to executing venues in North America and Europe.
Such is the competition nowadays, the seriousness of which indicates that enterprise technology and infrastructure firms have this year engaged in the practice of raising the bar almost every week during the last few months.
On this basis, TradingHUB has defined a particularly aggressive pricing model, which enables clients to gain access North American and European venues with a monthly subscription starting at $202.
What Does $202 Buy?
Forex Magnates spoke to Paul Edelmann, the firm’s Senior Vice President of Professional Services in order to define what the cost model represents and how a market participant can structure a relationship with CFN Services.
Mr. Edelmann explained: “CFN Services will charge $202 per month for a 1 Mb per second connection between CFN’s switches in any two datacenters. Bandwidth is guaranteed to be 100% of the amount ordered. Uptime is guaranteed at least 99.999%. All in-metro latencies are less than 1 millisecond roundtrip. All inter-metro and international latencies are less than 300 milliseconds roundtrip.”
According to research carried out by Mr. Edelmann, this pricing structure represents a cost model that is between two and seven times less than that of other large infrastructure firms which provide services to the institutional sector.
Points Of Presence: Built-in Obsolescence?
CFN Services performed an upgrade within its connectivity infrastructure insofar as that it now connects global liquidity venues via the firm’s secure Super Node architecture, while providing clients a secure Internet option.
The ethos behind the Super Node” switching infrastructure is that it utilizes carrier-neutral data centers instead of proprietary, legacy points-of-presence, therefore representing a very different approach to other firms in North America, such as TMX Atrium, which utilizes points of presence in many venues on the continent, and has recently invested in implementing points of presence in Europe.
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At this year’s iFXEXPO, there was considerable dialog among senior industry participants during a discussion panel which focused on technology, in which points of presence were discussed as being a favorable means of securing connection and avoiding denial of service attacks on broker’s infrastructure.
CFN Services takes a different view altogether, and considers its approach to be one which takes expensive dated equipment, facilities and operational costs out of the equation. Additionally, clients that choose CFN Services’ secure Internet option will gin access to the firm’s SDN (software defined networking) which removes the need for rack space, switches and cross-connects.
As a result of this means of operating, CFN Services aims its system at clients that seek less latency sensitive services including banks, brokers, exchanges, hedge funds, sell-side firms, analytics firms, clearing and settlement providers, and provides them with connectivity to major financial markets’ datacenters in New York, New Jersey, Chicago, Philadelphia, London and Frankfurt.
Variable Costs An Achilles Heel?
CFN Services is applying a surcharge over and above the subscription of $202 per month, of $2 per mb per second. Forex Magnates asked Mr. Edelmann if this could result in an obstacle when approaching firms, and if they may see this as being a potential variable cost that companies may object to. The importance being to understand what factors made CFN adopt this model rather than opting for a fixed cost lease of bandwidth.
“We want to bring the financial community closer together, so we removed the variable cost component that depends on distance. Between 1 Mbps and 1 Gbps, our research suggests that $2 per Mbps keeps the price of our reliable, secure service well below competitors’ prices” explained Mr. Edelmann.
Microwave vs Cloud and Fixed Infrastructure
When considering implementation of a new system and ensuring its pricing model is in keeping with current market demands and the rate at which technology evolves, a question which may well be of significance is whether enterprise systems firms such as CFN Services may go down the microwave route as the requirement for high speed connectivity, a methodology which is currently spreading worldwide via American companies, and is cost effective as microwave connectivity negates the need to use cabling to attach to new venues.
Mr. Edelmann explained his firm’s take on this: “Our TradingHUB offering is not designed for our clients who need the absolute lowest latencies. Instead, this offering is driven by the demand of our ultra-low latency customers who also have less latency sensitive needs asked us to give them a secure, reliable service that is easy to use and affordable priced.”
“Our TradingHUB offering is not designed for our clients who need the absolute lowest latencies. We will continue to support our algorithmic traders with our suite of lowest latency services” Mr. Edelmann confirmed.
““For years we’ve provided secure, ultra-low latency services to financial services institutions. Several of them, particularly sell-side firms, asked us to provide an easy-to-use, affordable service for applications less latency sensitive than algorithmic trading” Mr.Edelmann concluded.