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Nasdaq OMX Expands Market Access in Chicago for Futures & Options Trading Community

Nasdaq will open a point of presence (PoP) in Chicago, enabling traders in the midwest to connect with the eSpeed bond trading platform as well as Nasdaq cash equity and equity derivatives markets.

Signalling the imporatnce of futures and options traders, Nasdaq OMX announced the launch of a Point of Presence (PoP) in Chicago during the first half of 2015 that will expand its market services to the financial trading community there and connect them to the eSpeed bond trading system.

The Nasdaq PoP will connect traders in the midwest region to the Nasdaq data center on the East Coast. The Chicago PoP is located in the Equinix Chicago (CH4) data center on Cerrimac Ave. It will provide access to the eSpeed over-the-counter electronic trading platform for US Treasury securities, and Nasdaq's cash equity markets and equity derivatives markets located in Nasdaq's main data center in Cartaret, NJ.

While the eSpeed matching engine is located in Nasdaq's Cartaret data center, firms that don't have a presence there can go through Secaucus. "That allows our clients to connect with Cartaret, to receive orders, to send orders or to receive market data," says Stacey Swanstrom, head of Global Access Services and SVP of Global Trading and Makret Services at Nasdaq. "It makes it simple. All they have to do is cross-connect into our PoP and then we'll get the into Cartaret or get information to them," says Swanstrom

The move further expands Nasdaq's Global Access Services connectivity offering to the Midwest. Nasdaq opened a PoP in Secaucus, NJ, in September 2014. As a convenience for clients, trading firms can access eSpeed primarily through the Secaucus data center that hosts other electronic markets. "Most of our clients are in Cartaret, but for some there are major markets in Secaucus," explains Swanstrom. Following a similar strategy in Chicago, "Anyone that doesn't have a footprint with us in Cartaret can connect with us through Secaucus," she explains.

A PoP is an interface point between communicating entities, which is housed in a physical location that offers servers, routers and switches. In this case, Nasdaq has servers and connectivity in the Equinix co-location center that allow customers to connect into its markets. Customers can access the markets, send orders, and receive market data from third parties or market data from Nasdaq.

Swanstom says there are cost savings and high performance advantages for trading firms that use its Chicago PoP to cross-connect with Nasdaq markets and other services in Cartaret. "It's cost effective; it's less than 50 percent of the cost," says Swanstrom.

"Depending on their setup, one of the things we do is make it faster and cheaper and we provide the failover for them," she says. If they had to monitor failover on their own, the services can be pricey, she says. Redundant, high performance fiber circuits from Chicago to the Nasdaq data center in Cartaret will enable clients to send orders, receive acknowledgements and market data with one-way expected latency of 7.3 milliseconds.

Because of economies of scale, clients can customize their connectivity to only pay for the market information and services they need, states the release.

The Chicago PoP is convenient for traders because many futures and options traders already have a presence in Chicago data centers. "Really all the major futures firms are in Aurora and at Equinix," notes Swanstrom, referring to CME Group's colo facility and Equinix's data center. In order to trade on the futures indices, they do arbitrage using the data and information out of Chicago. Some of the data centers include Savvis, Telx, and those run by exchanges groups such as CME, CBOE, ICE, NYSE, and BATS. "Rather than set up access to Nasdaq, they could easily cross connect to our PoP," says a Nasdaq OMX spokesman.

Disaster Recovery
As of the fourth quarter, Nasdaq also announced that a new disaster recovery site for eSpeed will be available in Chicago. Today, eSpeed's DR site is in Rochelle Park, NJ. While Nasdaq has already moved the primary market to the Cartaret data center, "We don't feel comfortable having the disaster recovery site too close. And, most of our customers are in Chicago, so it's a natural fit having it there," adds Swanstrom. "Our clients trade multiple asset classes and the futures markets are out there," says Swanstom, adding, "It's a natural fit to put the eSpeed DR out there too."

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 the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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