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Should NYSE's Mahwah Data Center Fire Raise Concerns About Safety?

While the fire in NYSE Euronext's data center was immediately extinguished, the incident could raise questions about what exchanges are doing to protect their data centers.

An electrical fire that broke out on Sunday at the NYSE Euronext data center in Mahwah, New Jersey affected communications connectivity with 58 trading firms, according to media reports.

While the fire caused a temporary disruption, and the exchange was able to resume normal operations this morning, the incident could spark questions about how exchanges are prepared for fires, explosions, leaks and other catastrophes.

The Wall Street Journal reported the news of the fire late last night.

“The blaze was contained to one room that housed connections linking firms to other New York communications hubs, according to a notice sent Sunday night to clients. There were no injuries as a result of the fire, the notice said.”

"NYSE trading systems were not affected, and will operate on a normal schedule tomorrow, Monday, Oct. 10," representatives of NYSE Euronext (NYX) wrote in the note. The affected room helps connect 58 clients with other data center facilities in New York, and NYSE Euronext officials warned of potential interruptions to the transmission of information as service was being restored.

Data centers -- often called liquidity centers -- are now the nerve centers of electronic trading because they house the matching engines matching buy and sell orders in stocks, bonds, futures and options. All of the high-speed trading firms including hedge funds and electronic market makers that depend on low-latency trading strategies host their computers in modern data center facilities to collocate next to the matching engines. While the NYSE operates its a colossal data center in Mahwah, NJ, Nasdaq OMX runs a data center in Cartaret, New Jersey.

An article posted on DataCenter Knowledge’s site today said there have been fires in data centers previously and facilities are equipped to handle such events. The article notes that NYSE Euronext 400,000 square foot data center in Mahwah “is staffed around the clock by employees trained to respond to electrical fires and other emergencies. “

“We are grateful for the quick and thorough response by the Mahwah Fire and Police Departments as well as our Mahwah data center staff,” the exchange said.

For security reasons, exchanges normally do not discuss where their data centers are located. But clearly, exchanges are taking precautions to protect their communications lines and access to exchange trading systems.

In August, NYSE Euronext said it was building a new access center for the Secure Financial Transactions at a data center in Piscataway, N.J.

The new Access Center will offer full service and support for NYSE Technologies Secure Financial Transaction Infrastructure (SFTI) network including access to all NYSE Euronext U.S. Equities and Derivatives markets, NMS data and over 20 additional US market centers. A direct low latency SFTI Optic link will also be available from NJ1 to NYSE Euronext’s U.S. Liquidity Center in Mahwah, New Jersey. The new SFTI Access Center is scheduled to be operational in the first quarter of 2012.

Meanwhile, I am told the SEC has a rule requiring exchanges to have a backup disaster center that is 70 miles away from their primary site. Some sources are speculating that the DuPont Fabros Technology data center in Piscataway is going to serve as a backup to Mahwah.

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