In the last year, we've had customers interested in trading on Nasdaq's new NFX exchange. From what I can gather, NFX has been a price leader on super-liquid contracts, and traded volumes have been growing regularly.
But we don't connect to Nasdaq currently -- either for market data or for trade downloads. The reason is simple: it's way too expensive. Last I checked, connecting to NFX for drop copy requires:
- A physical server sitting in Carteret, NJ, or
- A hardware VPN connection using a physical Cisco-branded box.
Getting end-of-day market data requires something similar. This is hard for a number of reasons, not least of which is cost. Buying a Cisco-brand VPN box costs money. Getting a service contract for it costs more. Finding a specialized engineer for Cisco hardware adds to that price, and renting space at a server farm willing to house your little Cisco box costs even more than that. All of this, of course, is far less expensive than leasing a slot in Carteret.
This is all ridiculous, because:
- End-of-day market data is not anything secret. In fact, according to our friends at ICE, it's public information under the Commodity Exchange Act.
- Trade data is secret, but both ICE and CME provide adequate security through their FIX APIs. The CME even has an awesome new API that we've made an open-source adapter for.
- Requiring a hardware VPN completely rules out the use of services like Amazon's AWS, which is the virtual data center that pretty much every tech startup I know, uses. Doing so requires tech companies to build out a whole set of server infrastructure, just to connect to Nasdaq NFX.
I'm not sure why all this is the case. The most apparent reason is that Nasdaq relied on legacy, proprietary, low-latency equities infrastructure when they launched NFX.
That's massive overkill for most of the customers we've seen in energy. We hope the guys at Nasdaq will make their services easier to connect to -- ditching the hardware VPN requirement for drop copy, and making end-of-day market data public, the way ICE and CME do. We'd love to add seamless NFX reporting for all of our customers. Making it easier to do, would help us do that.