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Leading datacenter solutions provider Equinix Inc. (EQIX - Analyst Report) recently announced that its Hong Kong data center has been selected by Frankfurt-based hosting and co-location services provider RTS Realtime Systems Group. Financial terms of the deal were not disclosed.

Founded in 1992, RTS develops, designs and hosts multi-asset electronic trading software. Its customer groups include exchanges, investment banks, clearing firms, brokers, introducing brokers, proprietary trading firms, hedge funds, commodity trading houses and supply chain management firms. RTS offers low latency (the time that elapses between a stimulus and the response to it) access to a number of equities, options and futures markets across the world via its global datacenters in the U.S., Europe and Asia.

The latest RTS datacenter will be based at Equinix’s International Business Exchange (IBX) in Hong Kong. It will offer local users quick access to the Hong Kong Mercantile Exchange and the Hong Kong Exchange for trading purposes.

RTS shares a long-standing relationship with Equinix. In 2005, RTS linked its datacenter operations to Equinix’s Chicago IBX. In 2008, the company expanded operations through Equinix’s Chicago-3 IBX datacenter in Elk Grove Village, Illinois and the New York-4 IBX in Secaucus, New Jersey. In 2011, RTS opted for Equinix’ Frankfurt datacenter to provide its customers better access to Eurex and Xetra exchange and trading systems.

Leveraging Equinix’s state-of-the-art IBX datacenters, RTS has managed to enhance the speed, performance and reliability of its services by directly connecting to network service providers and financial trading companies operating within the center.

The growing need for big data exchanges call for greater usage of datacenters. To meet this global need, Equinix is expanding its IBX datacenter footprint globally and increasingly becoming popular among major players in the tech industry that are looking for data management. The company’s worldwide presence has resulted in high network density with a vertically focused approach, which will continue to support demand.

The company has delivered decent second quarter 2012 results with earnings per share (EPS) exceeding the company’s expectation. Moreover, revenue improved substantially on a year-over-year basis on improved colocation, interconnection and managed infrastructure services. Guidance for the third quarter and fiscal 2012 were encouraging.

We are also optimistic about the company’s recurring revenue model and current expansion plans. Despite all the positives, competitive threats from the likes of AT&T Inc. (T - Analyst Report) and Verizon Inc. (VZ - Analyst Report) raise our apprehension. European exposure and industry consolidation are also causes for concern.

Equinix has a Zacks #3 Rank, implying a short-term Hold rating.

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