TradeStream Analytics targets Equinix in Antitrust litigation
Equinix is accused of violations of the Sherman act (Monopolies and Combinations in Restraint of Trade), as TradeStream says Equinix misused its alleged monopoly in low latency access and co-location to major trading destinations.
Equinix, a leader in provision of low latency access and co-location to major trading destinations, is now involved in an antitrust litigation in the New Jersey District Court.
The case, brought by financial software solutions and trading platforms provider TradeStream Analytics, Ltd., was filed on June 28, 2017. The Complaint, seen by FinanceFeeds, states three counts: Violation of the Sherman Act (Monopolies and Combinations in Restraint of Trade), Intentional Interference with Prospective Economic Advantage, and Conversion.
- The Alleged Monopoly
The plaintiff claims that unless one uses Equinix’s services, there is no other low latency access available to the NASDAQ Exchange, Boston Stock Exchange, Philadelphia Stock Exchange , International Securities Exchange Holdings, Inc., BATS Trading, EDGA Exchange and EDGX Exchange, the Chicago Board Options Exchange or the Miami Stock Exchange for stocks and options.
Equinix access to these markets is estimated to account for about 85% of the daily options volume and about 66% of the exchange-listed stock volume.
Except for the New York Stock Exchange equities and options, the complaint states, Equinix actually controls 100% low-latency access to all stock and options markets. Also, Equinix is alleged to control 100% of low latency access to non-exchange trading destinations.
The plaintiff claims that Equinix maintains a monopoly over low latency access and co-location to major trading destinations.
Trading platforms connect to TradeStream’s Back Office, an algorithmic trading and smart routing management application that routes via low latency data connections to numerous trading destinations in the financial stock and option markets. In TradeStream’s business, having the lowest latency possible for trades is vital, as a trading platform which is too slow to route to trading destinations, will simply result in customers seeking another platform to make their trades.
- Locked out
In 2014, Equinix and TradeStream entered into an agreement for services at NY4 and TradeStream rented server space within a “cage,” wherein TradeStream would have an exclusive physical space for its servers. TradeStream installed and started operating its own servers within the cage. In the fall of 2016, TradeStream sought to upgrade its equipment by installing new servers and cables. However, Equinix refused the delivery of the cables several times.
By January 9, 2017, Equinix had locked TradeStream out of its cage. Equinix has also indicated that it intends to lock TradeStream out of the NY4 facilities in the immediate future.
- The damage
As a result of not being able to install the cables, TradeStream claims to have suffered at least a $25,000 monthly loss of revenue since mid-December. In addition, contracts that would increase revenues an extra $300,000 per month had to be put on hold in early February.
Tradestream estimates that it has lost over $1.2 million in revenue since February.
Not being able to use Equinix’ s NY4 facilities would result in a delay of a minimum of 5 to 10 milliseconds in routing and executing trades for TradeStream. This delay is unacceptable to financial firms that partner with TradeStream or would consider doing business with TradeStream. Monetary damages , the plaintiff says, are insufficient to repair TradeStream’s relationships with its customers, as the current inability to provide a high bandwidth, low latency connection is harming TradeStream’s reputation.
The plaintiff warns that if it is forced to use a provider other than Equinix, TradeStream’s ability to do business will be destroyed.
TradeStream seeks awarding compensatory and other damages, as well as enjoining Equinix from interfering with the delivery of goods to TradeStream and enjoining Equinix from interfering with TradeStream’s personnel’s access to the area licensed to Tradstream. The plaintiff also seeks a judgment enjoining Equinix from violating the Sherman Act by denying TradeStream access to essential facilities.
- And now?
On Thursday, June 29, 2017, summonses were issued to Equinix, Inc. and Equinix, LLC. Katharine S Hayden is assigned as a judge to the case captioned TradeStream Analytics, Ltd. v. Equinix, Inc. et al (2:17-cv-04765).