CNSX Markets Inc. offers two securities marketplace facilities. One, the Canadian National Stock Exchange (CNSX), is an innovative new stock exchange for listing and trading the equity securities of emerging companies. CNSX's unique market model matches enhanced disclosure and streamlined issuer regulation with leading-edge technology and comprehensive regulatory oversight to meet the needs and characteristics of emerging companies, their investors and investment dealers.
The other facility, Pure Trading, is the first alternative trading system in Canada to provide a visible electronic auction market, combining a high-capacity, low-latency trading environment with a highly competitive fee structure.
CNSX's unique business model allows it to compete effectively in the securities market against traditional stock exchanges, where high costs and large capitalization requirements are often barriers to trading in a junior company's securities. CNSX, on the other hand, offers a low-cost, streamlined stock exchange environment characterized by simple, straightforward rules, streamlined issuer regulation, a high standard of financial disclosure, and a very lean operation that allows competitive pricing.
"A big part of the CNSX story and a significant contributor to our competitive differentiation and success to date, has come from offering our clients better, faster trading technology and network connectivity that is inexpensive and easy to access," says Richard Carleton, VP, Corporate Development, CNSX Markets Inc.
At the heart of the CNSX technology solution is a trading application and connectivity software, both licensed from NASDAQ OMX Markets Technology, NASDAQ's technology operation. More than 1,000 connections to this trading engine via its communications gateway, mostly in the form of high-speed, high-capacity leased lines, have been established by banks, brokers and other members of the trading community in Canada and the U.S.
With so much riding on it, the performance and reliability of CNSX's technology is paramount. For CNSX, very high levels of system uptime are simply a 'given' - a fundamental part of being a viable player in an industry where the level of tolerance for problems associated with technology is virtually zero.
"Whenever anyone in this business has problems that affect service delivery, it generally ends up in the press," explains Carleton, "So we need to do whatever it takes to reduce or eliminate the chances of networking, application or hardware infrastructure problems occurring."
To achieve the necessary levels of system performance and reliability, CNSX decided from the very beginning of operations in 2003 to outsource the hosting of its critical application and networking infrastructure to a data centre services provider.
"As a small firm starting out, and even today as a larger organization, we know that it would cost far too much money to build a professional, world-class data centre environment that can deliver the levels of performance and reliability we need," says Dave Timpany, Director of Trading Systems & Operations at CNSX.
In addition, CNSX felt that by working with a service provider that has a number of other customers, the economies of scale would allow the provider to do a lot more for them and provide additional services at a lower cost than they would ever be able to do themselves.
"Even now that there are 30 or so of us on staff at CNSX, it simply doesn't make good business sense for us to hire staff skilled and devoted to engineering, monitoring and managing these systems," adds Timpany, "We're better off relying on a partner for this because it's what they do every day and they have the experienced staff to manage it effectively."
After scanning the market for a potential data centre services partner, CNSX chose to contract with Q9 Networks to provide co-location services - space, power, HVAC, security, 24x7 monitoring - for CNSX servers, which have subsequently grown in number from the original three to more than 50, supporting CNSX's core trading systems.
"They were really the only viable provider at the time that could deliver the services we needed," says Carleton, commenting on their choice of Q9. "Although we've been approached on a number of occasions since then by other firms offering similar services, we're very happy with Q9 and haven't seriously considered other offers."
In addition to CNSX's server infrastructure, Q9 hosts the associated networking infrastructure, working closely with CNSX clients to install and support the many network connections into the trading system and providing firewall management and network engineering services to ensure the security, performance and reliability of the overall network. CNSX staff work closely with Q9 staff to support the complete CNSX environment at Q9. If any of their systems needs maintenance or repair services performed, CNSX can use its own technicians or have Q9 technicians dispatched to perform these services.
What has proven to be an important aspect of the service that Q9 provides to CNSX is security - the physical security of the Q9 environment and the security of the network connecting the trading system with CNSX clients such as brokers, banks and many others. These clients are sending confidential information to the CNSX system about their own customers, so it's critically important to ensure that this data is properly safeguarded from both physical and electronic attacks.
"In addition to the required space and specialized staff, it would not have been feasible for us to replicate the engineering that Q9 has put into ensuring that we get the level of security we require from a business perspective," says Timpany. "Q9 has been very strong in providing these security services."
CNSX continues to grow, adding different trading systems for different markets and is planning to add disaster recovery services from Q9 based on fault-tolerant failover to a second Q9 data centre. Throughout this growth, CNSX has been able to add additional servers and other infrastructure to its environment at Q9 at any time, with little additional cost.
"With Q9, we don't have to worry about the technology side of our operation. We can focus on the business side, where we can invest in expanding our knowledge and services around trading and better understanding what our clients need and how different traders need to interact with each other," says Carleton, adding that there is no real advantage for them to invest in having internal network engineering or hardware management expertise since they would deliver little extra value to their clients in this area.
"We leave all this to Q9, whose people are knowledgeable and professional. They also have a very rigorous process when it comes to systems management and network engineering, so there really hasn't been anything that has popped up as a surprise," enthuses Carleton, who concludes by saying that, "As a result, we're not only able to offer a very high level of service even though we're a small organization, but we also gain a financial advantage by being able to offer cheaper trading without compromising our service levels."
