The Australian Securities Exchange (ASX) will share the three-story building set aside for its co-location offerings with another company, after scaling back its lease arrangements last year.
The exchange initially planned to lease a three-storey building at the Gore Hill Business Park on Sydney’s north shore at a cost of $62.5 million over 12 years.
It spent $32 million fitting out the 1000 square metre co-location facility, called the Australian Liquidity Centre (ALC).
But in December, the ASX revised its lease arrangements, reducing its rental costs by almost half to $33.9 million by occupying only “level one of the data centre”, it stated (pdf).
Chief information officer Jeff Olsson told iTnews last week that a Singaporean company had taken over the remaining space.
“The building was purchased by a Singaporean company, which is building it out as a data centre, as we didn’t require the additional space,” he said.
Industry sources speculated that the ALC was too pricey to attract enough co-location customers.
But the ASX said its “headline price for a cabinet” had halved since moving from its at-capacity facility in Bondi.
Olsson would not disclose figures but said the exchange was “happy” with occupancy levels at the ALC, designed to hold 100 ASX cabinets and 500 cabinets for its trading customers.
Before switching on services in Gore Hill in February, the ASX hosted 20 customers in Bondi, which now functions as a back-up facility.
ASX fee schedules indicate that customers paid $5000 a month for a physical rack with 2kW of power in Bondi as of July 2010.
As of December 2011, the ASX charged $2500 a month for a cabinet with 2kW of power in the Australian Liquidity Centre and $2000 a month for a cabinet in Bondi.
Competitor Chi-X said it offered co-location services within its primary facility at Equinix, but referred questions about pricing and uptake to the data centre operator.
Equinix Australia’s country manager Tony Simonsen highlighted a growing demand for high-connectivity, low-latency co-location in the financial services sector, but did not disclose details.
“Together with cloud service providers, the financial services community is one of our strongest growth verticals,” he said.
Equinix Australia sales director Jeremy Deutsch acknowledged that Chi-X had driven an increase in demand from financial organisations for its co-location services.
“Chi-X has created an environment where many other market participants on the equity site of things are very interested in connecting to them and enabling their business,” he said.
An industry source said any market participants adopting ASX co-location services would likely also co-locate with Chi-X because those traders relied on getting the best price at any given time.
Corporate regulator ASIC’s “best execution” framework will require relevant market participants to transmit orders to both Chi-X and ASX as of 1 March next year.
Co-location customers of the ALC include ABN Amro Clearing, Citi Group, Goldman Sachs, Incidium, Instinet, PipeNetworks, Optus Business, Morgan Stanley and Deutsche Bank.