Speed, Strategy, and Scale: Amsterdam’s Edge in US Options Trading

Amsterdam: A Thriving Center for Quant and Algo Trading

Amsterdam, famous for its relaxed culture, canals, and bicycles, also hosts a booming High Frequency Trading (HFT) industry. The city has emerged as a key hub for latency-sensitive algorithmic trading, attracting major firms due to its strategic location, access to EU financial markets, and business-friendly environment. Brexit further accelerated this trend, prompting leading algorithmic and quantitative trading firms to expand their presence in Amsterdam to ensure seamless access to EU jurisdictions. As a result, the city is now home to a wide range of prominent trading firms, reinforcing its status as a leading hub for systematic trading.

Accessing the US Equity Options Markets

According to data from the Options Clearing Corporation, the US market for equity options had another record-breaking trading year in 2024 - the fifth record year in a row. The growing participation of European traders in the US equity options market, along with the emergence of new products like zero-day options, has led to a sharp increase in data traffic between Amsterdam and US exchanges. This surge has driven greater demand for robust infrastructure bandwidth to keep pace with the ever-increasing volume of data flowing through global trading systems.

Amsterdam-based proprietary trading firms looking to trade in the US options market face several challenges, including the need to comply with evolving regulatory frameworks such as the EU’s Digital Operational Resilience Act (DORA), which governs operational resilience and cybersecurity for financial entities. While DORA does not restrict access to US markets, it adds complexity to infrastructure and compliance planning. At the same time, firms must ensure access to reliable low-latency trading and robust market data feeds to support systematic strategies. Ultra-fast infrastructure located near the exchange’s matching engine is essential, as processing data close to its source minimizes latency—critical for execution speed. For banks and hedge funds, high-fidelity, low-latency data is the foundation of execution decisions. However, building and maintaining a global network with low-latency circuits and fully diverse secondary paths can cost millions annually.

Infrastructure, Connectivity and Market Data Services

Underlying trading infrastructure is extremely expensive and requires significant technical expertise and ongoing investment. Increasingly, financial traders based in Amsterdam are engaging Managed Service Providers (MSPs) to provide infrastructure, connectivity, and market data services. MSPs provide much more than just migration services; they can deliver access to global financial markets, offering scalability and expertise often unavailable in-house. Choosing the right provider requires careful evaluation of their ability to scale solutions and meet expanding bandwidth demands. MSPs enable economies of scale by sharing global infrastructure and delivering services with minimal latency and maximum performance. This is especially important as financial traders’ activities intensify, requiring rapid responses during high-activity periods.

A managed solution that provides both access to and distribution of vast amounts of raw market data is of equal importance. As traders enter the market, become successful, and diversify their portfolios, their market data needs can place excessive network capacity pressures on infrastructure. Therefore, an MSP must be able to accommodate and handle sudden data bursts during high-activity periods.

Finding the Right MSP

Selecting the right MSP is crucial for maximizing the benefits of outsourcing. Firms should look for providers that combine network scalability, low-latency connectivity, and reliable access to global financial markets, especially all markets in the US. Those that integrate application management, market data delivery, and consulting services can streamline operations and reduce costs. TNS is the only global provider to combine a vendor-neutral approach to market data application management, alongside end-to-end hosting, market data, and consulting services.

An MSP that operates across multiple clients and vendors offers unique advantages. For example, if one client reports an issue, such as incorrect pricing on a stock, the MSP can quickly determine whether the problem is with the exchange, an aggregator, or the client’s infrastructure. By monitoring service incidents across all clients, MSPs can identify and address problems faster than individual firms. In many cases, MSPs detect and resolve issues before clients are even aware of them.

Conclusion

European trading firms must continue to evaluate their insourcing and outsourcing strategies. Especially for firms in Amsterdam, the right MSP can be a vital partner in achieving their business goals and maintaining a competitive edge. As the trading landscape evolves, partnering with the right MSP can be the key to unlocking new opportunities and sustaining long-term success.