U.S.-based Crypto Exchange; Kraken has unveiled plans to launch its colocation service, promising ultra-low latency trading execution for clients worldwide. Set to go live in the coming weeks, this new service aims to level the playing field by offering sub-millisecond execution speeds not just to large institutions but to all Kraken clients and partners.
According to the release, traders operating from London can expect latency of under one millisecond, allowing them to execute trades at lightning-fast speeds—a critical factor in crypto markets where price swings can occur in the blink of an eye.
While colocation services are not new to the trading world, Kraken is taking a different route by prioritizing fairness and accessibility. Such low-latency services are typically reserved for institutional investors and large financial entities. However, Kraken’s head of exchange, Shannon Kurtas, emphasized the company’s unique approach:
“Many exchanges offer colocation services, but Kraken’s approach is unique – we’re making it accessible to all partners and clients, not just institutions,” Kurtas noted.
This move aligns with the broader decentralized ethos of crypto—promoting an open and transparent market where speed and efficiency are no longer the exclusive domain of large players.
Why Speed Matters in Crypto
In volatile crypto markets, trading speed often determines profitability. A fraction-of-a-second delay could mean the difference between a successful trade and a missed opportunity. Kraken’s colocation service allows clients—from individual traders to brokers and fintech firms tapping Kraken’s liquidity—to position their servers adjacent to the exchange’s matching engine. This physical proximity minimizes data transfer time, offering near-instantaneous trade execution.
Kurtas also noted that Kraken’s liquidity partners, brokers, and even smaller fintech companies will be able to tap into the colocation service, broadening the scope of users who benefit.
Colocation Service Details
Scheduled to roll out in the coming weeks, Kraken’s colocation service allows clients to place their trading servers in close proximity to the exchange’s matching engine.
This proximity minimizes data travel time, reducing latency to under a millisecond for traders operating out of London. Such rapid execution is crucial in the fast-paced crypto markets, where price movements can be swift and substantial.
“Many exchanges offer colocation services, but Kraken’s approach is unique – we’re making it accessible to all partners and clients, not just institutions,” said Kurtas.
To bring this service to fruition, Kraken has partnered with Beeks Financial Cloud Group, a renowned cloud computing and connectivity provider for financial markets. This collaboration marks Beeks’ first venture into the cryptocurrency exchange market, leveraging its Exchange Cloud to provide institutional-grade infrastructure from Kraken’s European data center.
The partnership, structured as a revenue share deal, is expected to enhance Beeks’ market presence and profitability by tapping into Kraken’s extensive client base of 13 million users, offering substantial revenue growth opportunities.
Industry Trends Towards Low-Latency Trading
Kraken’s move aligns with a broader industry trend where exchanges increasingly offer colocation services to meet the demands of high-frequency traders and institutional clients.
For instance, One Trading has collaborated with Amazon Web Services (AWS) to provide cloud-native colocation solutions, emphasizing the critical role of low latency in trading strategies.
Companies like BSO Network also offer low-latency cloud connectivity, connecting major crypto exchanges and market data providers across multiple geographies and supporting market-making, arbitrage, and liquidity aggregation.
Quick Facts:
- Kraken’s Colocation launch Set to debut in the coming weeks, offering ultra-low latency trading with sub-millisecond execution times for London-based traders.
- Kraken collaborates with Beeks Financial Cloud Group to deliver institutional-grade infrastructure, marking Beeks’ first entry into the cryptocurrency exchange market.
- Exchanges like One Trading and service providers such as BSO Network are emphasizing low-latency solutions, highlighting a market-wide move towards faster trading capabilities.
- Enhanced trading speeds are expected to attract institutional investors, boost trading volumes, and contribute to a more stable cryptocurrency market.
