Marseilles, year 2040. Like every morning, at the Joliette exit, they hurry in their neatly dressed suits with their sunglasses to get to their offices. They ? An army of traders based in Marseille, not so much for the sun – although it is not forbidden to combine business with pleasure – as for its Internet cabling and its data which spins at the speed of light. The show has become usual. An exaggerated and insane perspective, you say? Certainly. But not so fast.
Today Marseille is the world’s seventh Internet hub and aim for the top 5. Ideally placed at the interface of the northern and southern hemispheres and cabled directly with still emerging financial markets, such as the Middle East, South America and China and Africa, the city could have some strong arguments to assert in the years to come.
Finance addicted to speed
” Places stock exchange depend on network infrastructures, and therefore on optical cables”, summarizes Thomas Renault, lecturer at the University of Paris 1 Panthéon-Sorbonne, specialist in finance. And the trend in the markets is clearly “race for speed”. Speed, a particularly essential dimension for high-frequency trading, which consists of exploiting market anomalies. “For example, if an asset is a little cheaper in Frankfurt than in São Paolo, we will place a purchase order in Frankfurt, resell immediately in São Paolo to pocket, without risk, the small centimes of difference”, explains the academic. “But in finance, anomalies don’t last long, so it’s the quickest who get there,” he continues.
A sufficiently lucrative sector of activity for a company in the United States to have invested 300 million dollars for this purpose in a cable connecting directly the servers of the New York and Chicago Stock Exchange, illustrates Thomas Renault. “So on paper, if the wired route is shorter, we’d better be there,” the professor theorizes. What will allow the Marseillais to hold the stock market strings in the future?
São Paulo in 150 milliseconds
A future in which Sami Slim, director of Telehouse France, a subsidiary of a historic Japanese operator of data centers and telecoms, also believes. “I think that in the long term Marseille could claim a place specialized in finance, because its roads are specific. For example, the EllaLink cable makes it possible to reach “São Paulo in 150 milliseconds from Marseille compared to 300 to 400 milliseconds from London or Frankfurt”, continues Sami Slim. A journey twice as short that makes the difference in high frequency trading.
Let the people of Marseille be reassured, the horde of traders slamming their bonus on the Old Port is not for tomorrow. “Marseille will not be the next London, it would be exaggerated”, tempers the leader. Passion that also calms Thomas Renault. “If the competitive advantage is so obvious, others, closer, will do it too”. However, it is by creating the necessary ecosystem that financial centers can emerge. “Historical dynamics have already shown this, in Tokyo or Frankfurt,” concludes Sami Slim.
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Stronghold of the Internet, can Marseilles mutate into a financial centre?
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