Bolsas y Mercados Españoles (BME) is planning to introduce co-location services for its market from November, as the Madrid-based exchange looks to capture more flow from high-frequency traders.
Co-location to the domestic Spanish market will be offered from its data processing centre in Madrid, allowing members to place their systems just a few meters away from the BME’s cash and derivatives trading engine. Real-time BME market data will also be accessible via the new co-location facility.
The co-location infrastructure will be managed by specialised BME staff, which the exchange says will ensure fairness of access and a secure system.
“The new service will improve access for members of the Spanish stock market, facilitating trading on our equities and derivatives platforms based on an infrastructure that ensures minimum latency and the highest operational capacity while at the same time maintaining a level-playing field for all investors in terms of access and the Spanish stock exchange’s current levels of robustness and security,” said Jorge Yzaguirre, director of the equity unit at the BME.
The firm says speeding up access to its market will help enhance liquidity and improve price formation. Yzaguirre estimated high-frequency trading currently accounted for around 30% of trading activity on the BME.
Co-location services will supplement the BME’s existing proximity hosting offering, which was first launched in 2009.
The new high-speed access options closely follow an upgrade to the BME’s trading platform, called SIBE, at the end of April. The new platform reduces latency tenfold to under one millisecond and consolidates trading in equities, exchange-traded funds and warrants on one platform.
Within the past year, the exchange has stated that the number of trades on its platform grew by 13% and the number of orders increased by 62%.
The domestic Spanish exchange has come under recent pressure from Chi-X Europe, the multilateral trading facility owned by BATS Global Markets, which surpassed 5% of market share in Spain in April thanks to a price promotion it has been running since last October.