The London Stock Exchange (LSE) has agreed to open access to the roof of its data centre after the U.K.’s Financial Conduct Authority (FCA) raised concerns that competition from high-speed traders may have been limited by their inability to use the site.
In a new report, the FCA said it is investigating whether the exchange and the landlord of the LSE data centre building “have hindered competition for low latency connectivity services between certain trading venues.”
The regulator said it is concerned that the LSE’s rooftop policy — which prevented rivals from installing equipment on the roof of its Docklands data centre and forced them to use inferior sites — “may hinder their ability to compete,” given the crucial role of tiny differences in communication speeds for high-speed traders.
“Offering very fast connections is key to competition, and to maximize the speed of their connections, providers must be able to place radio units close to trading venues,” the FCA said.
The regulator has not reached a conclusion on whether the lack of rooftop access amounts to a restriction on competition. In the meantime, the LSE and the landlord have offered to open access.
According to the report, the exchange would continue to use half the roof, while other firms would have access to the other half “on a fair and reasonable basis.”
The FCA said it believes the offer would address its concerns about competition but has opened the proposal to public consultation before reaching a final decision on whether to accept it and end its investigation.
Offering a potential solution does not amount to an admission that competition rules have been breached, the FCA added.
The consultation is open until Sept. 29.