Co-location minimises latency by positioning trading infrastructure near or within exchange data centres. This enables near real-time data access and provides a competitive edge to high-frequency trading (HFT) firms.

We delve into five primary co-location methods: primary co-location, which offers the lowest latency by housing servers near exchange matching engines; proximity hosting, which provides slightly higher latency through nearby facilities; point of Presence (PoP), which extends connectivity across broader regions; cross-connections, which link third-party infrastructures to exchanges; and cloud-based solutions, which offer global virtual access to data.

Beyond connectivity, co-location providers offer features like historical data storage, latency measurement tools, and raw or normalised data formats, catering to diverse trading strategies. For instance, firms like DxFeed provide datasets dating back to 1998, while Iress excels in European markets with backfilled data to 1993.

Cost and latency trade-offs are critical. Direct exchange licensing ensures lower latency but comes at a higher price, whereas third-party solutions offer affordability with slightly higher latency. This report also examines technical factors that influence performance, such as FPGA design and network quality.

From understanding co-location setup components to evaluating providers, this guide equips firms to align infrastructure choices with trading goals and optimise market data access.