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McKay Brothers Shaves Latency Off Illinois-New Jersey Colo Route

Releasing its roadmap for 2014, microwave telecom provider McKay Brothers plans to reduce Ill.-N.J. roundtrip latency further, triple line capacity and launch single megabit slices for private bandwidth.

McKay Brothers, a provider of specialty microwave telecom services to the low-latency trading space, said it lowered latency between Illinois and New Jersey colocation centers again this week, appealing directly to latency sensitive trading groups and their CTOs.

The company also provided visibility on its plan to lower latency on the IL-NJ corridor during 2014 specifically from the Chicago Mercantile’s data center colocation facility in Aurora, Ill., to third-party colo centers in Secaucus. In 2Q 2014, McKay expects to reduce round trip latency to 8.12 milliseconds on its Aurora-Secaucus path, and 8.05 milliseconds on the Aurora-Carteret path. In addition the company is tripling its private line capacity on all IL-NJ routes, and launching a single megabit bandwidth service, which is targeted to be faster and remain faster than any commercial competitor’s service, it said.

In April, Nasdaq OMX and CME Group announced a lightening fast market data feed based on microwave connectivity between Aurora, Illinois and Cartaret, New Jersey.

[For more on Countering HFT Exclusives, CME-Nasdaq Launch Microwave Connectivity for Market Data, see Ivy Schmerken's related story.]

In unveiling this 2014 U.S. roadmap, McKay is sending a message to CTOs, risk takers and risk manager who are making technology and capital allocation decisions.

“Private bandwidth is a significant investment for any firm and a complex choice for any CTO,” says McKay co-founder Bob Meade. “This roadmap provides clarity on our plans to drive latency toward the speed of light, to deploy substantial additional capacity and to broaden availability. We believe greater transparency helps bandwidth users and investors make better informed choices.”

The Oakland-Calif.-based company cited lower latency from innovative equipment upgrades and path length reduction as factors.

“With equipment improvements from our microwave radio manufacturer, Aviat Networks, we reduced our Aurora-Secaucus latency last week to 8.206 from 8.240, and reduced our Aurora-Carteret latency to 8.147 from 8.181. The build plan through the second quarter of 2014 is firming up nicely,” says Meade. “After that there’s less visibility, but I expect we will deliver by year-end latency below 8.05 to Secaucus and below 8.00 to Carteret.”

The foundation of McKay’s plan resets on its signature IL-NJ route, said the company.

“Top tier microwave networks require a substantial long term commitment of capital, time and talent,” says McKay co-founder Stephane Tyc. We executed early to get the very best route and we are committed to reinvesting in the most innovative technology to remain an industry leader.” Tyc said customers are relying McKay for telecom services “allowing them to focus on their core competencies of trading and risk management rather than devoting scarce resources to telecom builds.”

To improve reliability, in September, McKay deployed its first microwave repeater with space diversity — Aviat Network’s low-latency repeater solution.

“Specialty microwave providers, ourselves included, grappled with summertime reliability and network up time in 2013,” said Meade. But in 2014, McKay will have space diversity and hot standby on almost all links so if that path fades or equipment fails we automatically switch to another.”

In 2014, McKay will triple its bandwidth capacity for private line service between Illinois and New Jersey. Since inception the company has devoted one microwave channel of bandwidth for private line service between Illinois and New Jersey. Next year, it will open two additional channels on the same path. Tyc said tripling its private bandwidth will give the company more flexibility to provide a broader range of service options to private bandwidth customers and to Quincy Data, McKay’s market data partner.

McKay has also doubled its point of presence (POPs) footprint to cover Aurora (DC3) in Illinois; and Secaucus (Equinix NY2 and NY4), Newark (165 Halsey), Carteret and Weehawken (Savvis NJ2) in NJ. McKay opened its newest POP at NY2 just last month. Within weeks, the company expects to add a POP in Piscataway, NJ, a new POP at Cermak in Chicago to serve long haul clients, and in 1H 2013, Mahwah, N.J.

Single Megabit Product

The newest offering is for private bi-directional bandwidth service between Aurora and each McKay New Jersey colo, in allocation of 1 megabit (Mbps). The service is targeted to improve along with any competitor’s commercially available product. For example, it will offer an initial latency below 8.43 ms to Secaucus and offer opportunity for improvement during the term. “We are introducing single megabit slices to respond to the market’s demand for smaller allotments of extremely low latency private bandwidth,” stated Jim Considine, McKay’s head of business development. It is offering subscribers a three-month contact and a termination right if the company doesn’t match or surpass any commercial competitor’s latency during the term.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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User Rank: Author
12/2/2013 | 3:36:22 PM
re: McKay Brothers Shaves Latency Off Illinois-New Jersey Colo Route
You raise a valid point, We keep hearing that spending millions to get a fraction of a millisecond faster is not worth it.
New Jersey has become a big deal because all the US stock and options exchanges have their colo sites in NJ. Speeding up the Chicago to NJ route is hot because it links CME's listed derivatives markets in its Aurora, Ill. to currency, fixed income and interest rate markets run out of data centers in NJ. Makers and hedge funds can do an arbitrage trade between the listed futures and cash government bonds and OTC interest rate swaps. Players in fixed income and FX like ICAP
and eSpeed (acquired by NasdaqOMX) run their markets in colo sites in Secaucus and Cartaret. Since we don't know the cost of this ultra-low latency route, it's hard to know if this can benefit a small firm. With the launch of SEFs for credit default swaps and interest rate swaps, this route is bound to become more important.
Becca L
Becca L,
User Rank: Author
12/1/2013 | 2:08:12 AM
re: McKay Brothers Shaves Latency Off Illinois-New Jersey Colo Route
I'm surprised by all the attention in New Jersey! I suppose these kinds of low latency milestones really affect the geography of business centers.

There is a lot of debate these days over the benefits of more speed versus investment in big data and strategy. The flexibility and reliability standards set by McKay are alluring, and they say this is an important investment for those whose trading relies on speed, but for smaller trading firms I question if the cost is worth the saved microseconds.
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