FFastFill will be one of the leading providers of connectivity, risk management and post trade services into the new London Metal Exchange proximity and colocation environment when it goes live.
The LME has contracted to open access points to two UK data centres, Equinix’s in Slough and Interxion’s in East London, as the exchange prepares to expand the availability of its electronic trading platform – Select – to a broader range of users. These include algo, low latency and high frequency traders who require secure access to bids and offers at speed in order to execute pre-set trades.
The LME trades forward physical metal contracts – as opposed to pure futures contracts – in ten global non ferrous metals and one steel contract. It is the global market leader for metals price discovery, reference pricing and risk management and in 2010 traded over $11.6 trillion of metal. As such it is increasingly attracting the attention of investors outside the physical metals business, many of which use the electronic trading platform – Select.
Caroline Davis, Global Head of Trade Execution Services at FFastFill, the provider of broker trading and risk management services to LME members and their clients, said “Colocation will be an important innovation when it arrives at the LME and FFastFill, as the leading services provider to LME Category 1 and 2 members, expects to see considerable interest in this development. We expect a surge in algo and low latency trading, while specific features such as spread trading and the efficient execution of, for example, random iceberg orders, will be greatly enhanced.”
“But it will be important that this new electronic access facility does not impair the traditionally important role of the LME in the physical markets and that it does not bring new risks to the exchange and its users. FFastFill’s pre and post-trade risk management software is extremely robust and flexible and will more than comfortably cope with this new activity.”
NOTE: A FFastFill White Paper on the implications of the LME Colocation strategy is to be found on http://www.ffastfill.com/press-release/white-paper
