McKay Brothers International, a provider of low latency telecommunications between financial markets, is offering what it claims is the lowest known commercial latency between Tokyo and trading centers in Shanghai and Hong Kong as it seeks to cater to speed-conscious market participants in the region.
McKay's service between the CC2 data center in Tokyo and the Shanghai Futures Exchange data center, which combines microwave and fiber optic connections, takes less than a 22.86 millisecond round trip, while its service between Tokyo-CC2 and the data center at the Hong Kong Exchanges and Clearing delivers data in less than a 39.83 millisecond round trip.
McKay has also recently improved the latency of its hybrid microwave/fiber service between Tokyo-CC2 and the Singapore Exchange, which it debuted in 2016, offering the lowest known latency between those two end points, it said. The Tokyo-CC2 data center houses the co-location service for accessing several Japanese exchanges and functions as an important node for global trading into Asia.
The move comes as Asian markets continue to see increased interest and activity from global firms and local traders as well as increased cross-border trading within the region. China has steadily opened its futures markets and is seeing increased participation from traders in Singapore, Hong Kong, Japan and further afield. The Shanghai Futures Exchange, through its International Energy Exchange subsidiary, is one of three exchanges in China that has opened up its futures contracts to international participants.
While McKay does not know the specific contracts that its customers are trading, it does see new opportunities in China for all market participants and a growing demand from clients to connect Tokyo to Shanghai.
"As a provider of low latency telecommunications between the largest financial markets around the world it was a natural fit to help clients connect to Shanghai," said Tad Beckelman, McKay's director of Asia.
The privately-owned Oakland, CA-based firm, which has secured minority investments from Jane Street Group, IMC, Tower Research Capital, Susquehanna International Group and XR Trading in recent years, designs, builds and operates telecom networks and market data services for latency-sensitive traders and risk managers at banks, funds and proprietary trading firms.
"Navigating low latency communications can be a large effort and many firms struggle to compete in markets where a single firm has a latency advantage," said Beckelman. "McKay endeavors to simplify this aspect of our clients’ business by providing the lowest latency telecommunications equally and fairly to all firms that utilize our services".
McKay debuted its first Asia hybrid microwave/fiber network in 2016. Its first European routes between London and Frankfurt went live in 2014. Two years before that, it opened its first U.S. microwave route, establishing low latency connectivity between Chicago and New Jersey. The company says the best latency is offered to every client on each of their routes.
"We are solely a bandwidth provider—not a trading firm—and thus we are never a trading competitor with our clients," Beckelman said. "McKay is purposefully independent and offers the same level of service to everyone. There are no undisclosed 'faster paths'," he added.