October 13, 2011

Chicago-based CME Group said it’s opening a new colocation services facility from its data center located in suburban Illinois, offering clients the ability to place high speed trading strategies as close as possible to the CME’s Globex matching engine. Trading is set to go live on Jan. 29, 2012.

With more than 428,000 square feet of space — larger than 7 football fields—CME’s site will offer high speed electronic trading firms “equal pricing, the same terms and conditions as well as equal lengths of fiber between customer cabinets and the CME Globex matching platform or connections to carriers,” according to Brian Durkin COO for CME Group in Monday’s announcement.

CME previously rented space at the Equinix facility in the Chicago metro area, where the InterContinental Exchange’s (ICE) matching engine, banks and dark pools are also housed. But now the world’s largest derivatives markets operators is striking out on its own following the opening of its own corporate data center in Aurora, Illinois.

“They’re moving to this wholly owned facility that the CME as built on farm land in Aurora, which is set to go live in late January 2012,” comments Mike Persico, CEO of Anova Technologies, a fiber optic engineering company that lays shortest path routes. “The firms are moving as we speak,” says the source, adding that the CME’s move has occupied huge swathes of time from the trading firms and the carriers.”

The move is also significant because CME’s Globex was the engine that drove other trading firms to the Equinix facility to interconnect with the community there. “The CME to ICE (Intercontinental Exchange) trade used to be intra-data center,” says Persico. But the CME’s move has fundamentally altered the routes that people connect, says Persico.

The move reflects the insatiable demand for colocation space related to high speed automated trading “People are desperate for new liquidity centers,” comments Persico.

CME is also following in the footsteps of NYSE Euronext, which built a 400,000 square foot data center in Mahwah, New Jersey in 2009. While the trend has been for exchanges, ECNs and ATS venues to colocate in third party data centers offered by Equinix, Savvis and Telix, some of the biggest exchanges have built their own data centers. “The larger players have the critical mass to create facilities from scratch," says Persico. "Rather than spend inordinate amounts of money on an annual basis outsourcing this function, they can run their own assets in terms of building/ power, and provide that service to their customers,” says Persico.

ABOUT THE AUTHOR
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in ...