Commentary

John Turney
Traders Magazine Online News

Foreign Exchange Infrastructure: Yesterday, Today and Tomorrow

In this exclusive to Traders Magazine, John Turney, Global Head of Outsourced FX at Northern Trust, discusses the evolution of the fx infrastructure and what is to come.

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March 1, 2001

The Turret Landscape

By Peter Chapman

Turrets have been around since the early 1970s and are sold mostly to financial institutions in the world's trading centers: New York, London, Tokyo, Frankfurt and Hong Kong.

Although the business is dominated by Global Crossing and Syntegra (formerly British Telecom), others, notably Germany's Bosch and Japan's Hitachi, have large market shares at home.

Global Crossing estimates it controls 70 percent to 75 percent of the North American market and 60 percent of the world market. It has an estimated installed base of 100,000 turrets. Syntegra claims to have most of the balance of the North American market. Both firms split the U.K. equally.

Traders use turrets to trade both equity and debt securities, commodities, currencies and other financial instruments. Most users are on the sellside, but traders at the larger buyside shops do use smaller turret systems.

The largest trading floors may contain some 1,000 turrets, according to Global Crossing. In the equity world, turrets are used by both Nasdaq and listed position traders as well as sales traders of both stripes. Executives from Syntegra say they see more growth among sales traders as much traditional trading is moving away from voice to electronic means.

The key benefit of a turret over a traditional PBX (a conventional "switch") is multiple lines. Every trader in a room can access each of hundreds of lines. That means calls are most unlikely to go unanswered. If one trader is busy, another can pick up the call.

Reliability is also crucial because of the time-sensitive nature of trading and the opportunity cost of missed trades. Customers can go elsewhere by pushing a button.