Colt offers substantial infrastructure ecosystem
Colt Technologies is a private telecoms company owned by Fidelity. It delivers secure, on-demand services designed to meet the stringent requirements and speed of the financial markets. Among the more than 400 capital markets firms it supports worldwide includes 18 of the 25 largest global banks and 13 European central banks. With both sell-side and buy-side firms looking for reliable access to market data under MiFID II, having the requisite market infrastructure in place is a potentially daunting task.
This is where Colt Technologies – specifically its Colt Capital Markets division – comes in. Using Colt PrizmNet, a fully managed financial extranet that connects to over 10,000 capital markets organisations, MiFID firms can leverage Colt's low-latency infrastructure without the stress of trying to build their own infrastructure and connectivity solutions.
Colt PrizmNet is helping to create a rich ecosystem that aims to facilitate the cost and complexity of operating under MiFID II.
"We leverage Colt's assets: the network, the reach, the distribution capabilities," says Ralph Achkar, Strategic Alliances Director, Colt Capital Markets. "We have approximately 500 clients globally, supporting everybody from pension funds, Tier 1 banks, long-only mutual fund houses, high frequency traders and agency brokers, as well as exchanges and clearing houses.
"We are building out these services to provide managed services to capital market clients that combine the network with the ability to locate, host and operate infrastructure in third party data centres or exchange data centres, as well as provide them with connectivity to the exchanges and market data."
Colt has identified several core areas where they are able to support capital markets clients with their MiFID II requirements by leveraging Colt PrizmNet for network access, time stamping, algorithmic testing and market data. These include: organisational requirements, trading mechanisms, financial instruments, market structure, and, with respect to transparency, transaction reporting, trade reporting and investor protection.
"If you have software that meets a MiFID II requirement, for example algorithmic testing, we can host the solution and offer it to the market as a managed service. We work with a partner called TraderServe in this capacity. One of our approaches, therefore, is to look at different providers that offer deployed solutions and offer them the ability to enrich those solutions by using our network infrastructure and all the market data, providing a complete end-to-end solution," explains Achkar.
The second approach is to build on the Colt PrizmNet extranet to leverage Colt's connectivity reach. Given that in Europe alone it reaches into more than 10,000 commercial buildings, Achkar said it might logical sense to extend that connectivity to a wider range of service providers, in effect building an ecosystem that connects vendors with consumers.
"One specific area we are targeting is to attract vendors offering MiFID II solutions. For example, ARMs or APAs for transaction and trade reporting, so that they don't have to build connectivity and lines to different parts of the market. They can access one connection using Colt PrizmNet, which customers can then directly interact with in the ecosystem," explains Achkar.
"We have the infrastructure and the market data that enables any solution to run optimally under MiFID II. For investment firms who need to reach a destination such as a transaction reporting facility, we want to make reaching such a destination on Colt PrizmNet as simple as possible," concludes Achkar.