Does IPC Outage Show Weakness Of Proprietary Networks?

IPC’s network outage earlier this month, caused by an explosion in a manhole outside a New Jersey data center, showed the problems with proprietary networks, said Patrick McCullough,, CEO of Speakerbus, a competitor provider of trading systems.

“There’s a fundamental architectural difference between the way we do things and the way they do things,” he explained. “They have a private infrastructure that supports building to building enterprise connectivity for the traders, so you have to rent those services from IPC. Many times the customers don’t understand what type of resilience and redundancy is built into what they are contracting for. Most of what we do rides on the existing infrastructure of our customers and they usually have very large resilient structures they have built and tested.”

Those proprietary systems are also very expensive, he added. As financial institutions are looking to reduce costs, the Speakerbus gateways are attracting attention as an alternative to the proprietary networks that IPC and BT offer, he added.

“Having a proprietary systems that was built for traders is pretty much a thing of the past. The trader voice market is entering a very disruptive state where incumbents are trying to protect their base while the disrupters are listening to their customers and allowing customers to be more effective, efficient and have higher functionality at the same time.”

Firms want to move from a pure hardware platform to a hybrid model especially as new traders who are arriving on trading desks are more accustomed to software and app solutions and less dependent on hardware turrets.

“We are finding that next generation traders who rely on critical voice communications like Speakerbus have more flexibility. They are used to working in software or app, our customer advisory boards are telling us.”

Firms are moving from hardware to software, from proprietary solutions to a standards-based approach like Speakerbus offers, and from fixed to mobile, from on-premise to cloud. For companies selling hardware trading systems, this shift presents a challenge.

“If you are a company with a big installed based you are trying to protect, that makes it hard to move into the new environments.”

About Tom Groenfeldt

I write - mostly about finance and technology, sometimes about art, occasionally about politics and the intersection of politics and economics. My work appears on Forbes.com and International Finance Magazine. The Financial Brand ranked me 20 on a list of the top 25 global influencers in financial services and Jay Palter included me in his list of 250 fintech influencers to follow in 2016 http://bit.ly/1SSRXC6
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