Digital Realty Gets into Colocation Market for Electronic Trading update from September 2015

Digital Realty, the real estate investment trust that’s been changing direction away from its traditional strategy of leasing data center space wholesale, has taken another step toward a more diversified model, partnering with GMEX Technologies Limited to establish numerous electronic trading hubs in its data centers around the world, the company said this week.

The move will theoretically attract more retail colocation customers to the facilities that host GMEX servers, who will want to participate in the markets the trading technology company provides access to. Digital has been putting a lot more emphasis on retail colocation recently, aiming to leverage its global reach and build interconnection hubs in its data centers similar to what its rival and customer Equinix has built.

Earlier this year Digital took its biggest step yet in the new direction, acquiring Telx, one of Equinix’s biggest US competitors, for $1.9 billion. The deal gave Digital 1.3 million square feet of retail colocation space across 20 facilities and a big amount of new retail colo customers. It also gave Digital control over several key network interconnection hubs in the US.

The partnership with GMEX starts with Digital’s data center in Chessington, just outside of London. GMEX servers hosted in the facility will provide access to trading in emerging markets in Europe, including securities, commodities, derivatives, and foreign exchange.

The companies expect to bring the London hub online this October. Next year, they plan to launch a similar hub in Chicago for access to emerging markets in Central America and South America and in Singapore for access to Asian markets.

Traders and companies that serve the high-frequency trading ecosystem pay premium colocation rates to host their servers close to exchange servers to reduce latency. Both colocation companies like Equinix and exchange operators like Nasdaq and ICE provide such services in their data centers.