By Nick Collins, CCO at EXA Infrastructure.
From the early trading of government bonds and shares, to the digitisation of financial exchanges in the late twentieth century, the financial exchange market has seen many changes since the creation of the first Stock Exchange in 1602.
Today, the market is evolving once again, driven by rising retail participation, digital assets, and rapid advancements in Artificial Intelligence (AI) and cloud computing.
Unsurprisingly, this accelerated growth demands robust infrastructure. Enter: subsea cables – digital infrastructure responsible for carrying more than 99% of global intercontinental communications. In other words, the backbone of connectivity.
To support this growth and secure the future of financial exchanges, substantial investment will be needed to expand and, crucially, protect these critical subsea networks.
The question is, how can financial exchanges achieve this?
What are we (net)working with here?
Before ‘diving in’, let’s first take a look at the current state of subsea networking within financial exchanges.
In simple terms, the industry is in a strong position. Investment in network infrastructure is substantial and growing, particularly in technology that provides high-bandwidth, low-latency routes between financial hubs like New York and London.
However, financial exchanges are overlooking a key priority: network resilience. Subsea cables face consistent threats of damage, which can quickly lead to costly outages and internet disruptions. In March, an outage cost the Nigerian economy almost $600 million over a span of four days.
When it comes to network resiliency, hyperscalers have ‘been there, done that’ – providing valuable lessons that financial exchanges can learn from. Let’s see what that looks like.
Build in redundancy
In the context of subsea cables, network redundancy refers to having multiple cable routes or systems that can carry data between locations. This ensures that, if one cable is damaged or experiences a failure, traffic can be rerouted elsewhere.
Hyperscalers often look to geographic route diversity, multiple data centres and backup power supplies to maintain connectivity and minimise disruption. They also use automated systems to reroute traffic to ensure that data transmission is balanced.
With effort and investment, exchange operators can replicate this by ensuring that trading platforms have multiple routes to data centres and redundant hardware systems. This is increasingly important as banks become increasingly digitised and undergo global expansion.
Optimise networks to avoid bottlenecks
Hyperscalers also use a software-defined networking (SDN) approach to control and configure network resources instead of solely relying on hardware. This works by separating the control functions from the data transmission, allowing for more flexible, automated, and efficient management of network traffic and resources.
Similarly to the hyperscalers, exchange operators can deploy an SDN approach to avoid congestion and failures by rerouting traffic in real-time. This not only maintains performance in network disruptions but ensures low-latency data flow as well.
Real-time monitoring
We all love an AI tool that makes our lives easier, and hyperscalers are no different. For them, this is an AI-driven threat mitigation tool that helps spot anomalies in networks in real-time, avoiding any risk of downtime as they appear. Many also invest in self-healing infrastructure capabilities to minimise human intervention and speed up recovery times.
It’s worth noting that hyperscalers aren’t just building resilience against physical threats to their networks, but cyber threats, too. They often implement advanced security layers, like DDoS protection and Zero-Trust architecture to fight against threats – financial exchange operators should do the same.
To conclude, the evolving landscape of financial exchanges demands a proactive approach to ensuring network resilience. As global demand for connectivity continues to rise, financial exchange operators can build in redundancy and optimise networks to not only mitigate risk of downtime, but support seamless, low-latency operations. Ultimately, investing in resilient subsea infrastructure is essential for safeguarding the future of financial exchanges and maintaining the stability of the global economy.
