Understanding LiquidPath®: Eyes on Brazil

What is LiquidPath? Perseus LiquidPath is a fully managed service designed specifically for financial services firms to provide quick to market, low latency, low risk, secure connectivity and trading infrastructure around the globe. Simply, LiquidPath enables firms to move in and out of markets quickly and cost effectively to capitalize on new trading opportunities, with the flexibility to move that infrastructure as business priorities change.

With all that said, there are numerous reasons that firms still insist on building out trading infrastructure themselves. A quick look at the numbers, however, would make you seriously question any one of those. Leveraging the Perseus network and LiquidPath solution, firms can save on average 60% of the total cost it would take to build out new infrastructure to implement a trading strategy between two markets.


A Look at Brazil: In Brazil, the fully managed service becomes even more valuable as Perseus offers access to a team of regional experts to assist with hardware sourcing and installation services allowing US-based clients to best understand and work within stringent Brazilian import and tax policies.

Let’s look at the example of a customer who wants to take 2 rack units in exchange colocation for CME (Aurora) and B3 (SPA). In addition, they require market data for both B3 and CME (FX futures and equity futures) delivered to both data centers.  

 

By the Numbers: Building this yourself, you would need at least a half cabinet, switches, cross connects, servers and internet at both Aurora and SPA. When purchasing cabinet space directly from an Exchange, the minimum size order you can place is often a half cabinet, which is typically more than you would need to set up new trading operations. Perseus, on the other hand, is able to offer cabinet space on a per rack unit (RU) basis which becomes more cost effective for our clients. Additionally, purchasing servers in Brazil becomes both complicated and expensive. Purchasing in the US and shipping to Brazil will incur significant import duties while purchasing the hardware in Brazil is difficult without resources on the ground and also faces much higher sticker prices.

In addition to the hardware, you will also need connectivity to access each specific exchange (GLink at CME and RCB at B3). And to pass market data and orders between the two exchanges you will need at least 100 Mbps of network capacity.  On the Perseus ultra low latency path (currently the fastest commercially available) will cost $20,000. This brings your grand total to $57,410 of monthly recurring cost, again excluding market data and all of the initial setup costs, import taxes in Brazil (which can run into the tens of thousands) and the labor required to install and maintain this setup in both Aurora and SPA.

 

Leveraging Perseus LiquidPath you not only gain the benefits of expert implementation and local resources in both markets but you can leverage our economies of scale to purchase only what you need in terms of rack space, Exchange connectivity (RCB and GLink) and the actual network connectivity between the two markets. Adding in the cost of B3 and CME market data delivered to both Aurora and SPA your total monthly recurring cost amounts to only $22,700, offering a savings of exactly 60.46%!

 

I’ll let the numbers speak for themselves.