The London Stock Exchange (LSE) has launched a service that provides stock trading firms with faster access to TradElect and Infolect, the Exchange's trading and information systems.

The service allows firms to physically put their servers in the LSE's own datacentre, eliminating network latency and providing almost instant access to the trading platforms.

"The service will allow customers to host their algorithmic engines next to our core TradElect execution engine and aid further liquidity generation and market efficiency," said David Lester, chief information officer at the London Stock Exchange.

For member firms that are connected to the London Stock Exchange via 100Mbit/s lines, the Exchange Hosting service has the potential to reduce trade execution time by one and a half milliseconds – a crucial amount when prices are fluctuating quickly.

Exchange Hosting will be introduced in two phases.

The first spaces will be available later this month, with others becoming available in February next year in conjunction with a number of supporting services.