Settled amongst terracotta tiled rooves on the backdrop of rolling mountains, Euronext’s new data centre stands out as a starkly modern geometrically shaped warehouse surrounded by a guarded perimeter. It emanates importance.
It has taken 14 months to transition Euronext’s infrastructure from Basildon in the UK to a complex in Bergamo, roughly an hour and a half from Milan, owned by Aruba.it. The move is yet another symptom of Brexit. The prospect of an internalised Europe following the UK’s decision to sever its ties with the EU is now an expectation as opposed to a possibility, with this – an actual fortress – at its epicentre.
Euronext shares the impressive complex with several other major data and cloud providers. Judging by the level of security, these are no small fish. Several fences line the perimeter. Once through these, it’s pass access only, with several gates that pay homage to airport security, only opening in front of you once the one behind you is shut. Fort Knox comes to mind, or Gringotts. Behind this array of security hurdles are a series of white, blank and stretching corridors. Behind these walls is where the magic happens.
“There is a word we don’t use at Euronext, which is ‘cloud’,” says Stephane Boujnah, chief executive officer at Euronext. “There is no such thing as cloud. That word is forbidden at Euronext. What people mean when they say that is data centres filled with tangible wires and machines.”
In the first of a series of rooms sit 44 brokers who have their hardware co-located to Euronext’s server. Taking in the sight, the tangibility of Boujnah’s words sink in. Rows upon rows of grates and racks are methodically placed in precise order and equidistant from the server – a detail that is essential to avoid latency arbitrage. Each rack is filled with hundreds of computers equipped with wires and rhythmically flashing coloured lights. It is loud and hot and bright.
These are the members of Euronext that pay for co-location services – the practice of placing their own hardware as close to the exchange’s server as possible for more latency sensitive practices. The computers sit like inmates are behind two more layers of metal grating. There are no doubt prisons with weaker security dotted around the world. In another similar room sits more co-location hardware and the exchange’s Optiq platform. For the most high-speed connection, the exchange offers a microwave service through satellite dishes based on the roof of the building.
“Welcome to the trading floor, this is the new pit and these are the traders,” remarks Boujnah.
Internalisation
The move to Bergamo from Basildon in the UK comes as part of a push from Euronext and Europe more widely to internalise its financial markets operations post-Brexit. Paired with the UK’s departure from the European Union, Euronext’s acquisition of Borsa Italiana from the London Stock Exchange Group (LSEG) as part of its Refinitiv takeover has equipped the exchange with the tools it needs to reduce its reliance on the UK all together.
Beginning with the data centre move, Euronext has set out plans to continue on this internalisation path with the migration of its cash equity markets in Italy onto its Optiq platform in March next year, removing the need to pay LSEG for the use of its technology. Once Borsa Italiana’s flow has been migrated, roughly 11 to 12 billion euros will be changing hands using the technology situated within Aruba.it each day.
At the end of 2023, Euronext has also set out plans to begin migrating its clearing operations away from LSEG’s LCH and over to the Bloc using its internal clearing house – Euronext Clearing, formerly CC&G – also acquired through the Borsa Italiana deal. The exchange moved to break off its 10-year deal – originally due to expire in 2027 – with LCH SA in November after announcing its plans to move its clearing operations to Italy.
“This is an internalisation decision. We have decided to internalise wherever we can fundamental features of the organisation,” says Boujnah. “The data centre was based in London as at that time it was the financial centre of Europe. We are building a situation where Europeans can manage data strategy within the EU in a predictable regulatory environment and in a country where we have significant operations.”
Sustainability
The migration has also given Euronext better control over the sustainability of its operations, boasting the fact that the complex is 100% renewable energy powered. It sources its energy via hydropower from a nearby river. Data centres are gluttons for energy, requiring an immense amount of power not only to generate the computers, but also to cool them down. With regulators increasingly shining a light on the less ESG friendly corners of the markets, data centres not so aligned with Euronext’s will no doubt fall under interrogation soon enough.
“Post-Brexit it was mission critical that something as important as this was based somewhere more certain,” says Boujnah.