KVH Preps US PoPs for Tokyo

KVH, the Fidelity Investments-backed Japanese hosting center and fiber network provider, plans to set up a point of presence (PoP) in Chicago this year, to provide dedicated connectivity between trading firms in the city and execution venues in Japan, in response to increased demand for access to the region's markets, officials say.

"A lot of hedge funds and proprietary trading houses have so far been focused on the US and Europe, but now it seems more are turning their attention to Asia-Pacific, and we have the fastest circuits in Japan - maybe not for the Tokyo Stock Exchange on its own, which offers co-location, but definitely if they want to trade across multiple exchanges," says Glenn Inouye, a consultant who represents KVH in the US.

"Previously, there wasn't as much liquidity in the [Japanese] markets, but now people want low latency for arbitrage trading, such as in the Nikkei 225 index, which is listed on the Tokyo and Osaka stock exchanges as well as on the Chicago Mercantile Exchange," he says.

Direct Needs

Inouye says KVH has around 20 clients buying circuits to Tokyo and Singapore, and aims to have a Chicago PoP live by the end of this year to enable the vendor to provide direct access to Japanese markets via its fiber network. The vendor can already offer connectivity between Chicago and Tokyo, though this requires it to use fiber from other providers, he adds.

"We know we're the fastest within Tokyo, and going across the ocean all providers are probably even [since they use the same underwater cables], so the key is who can provide the local tail-end of the connection-so we are looking closely at our US connectivity, and we are talking to partners and other telcos," he says.