By taking over the data center operations, CME Group is acknowledging what we’ve known for a long time: for many, proximity access to the exchange has significant value to some participants. This is obviously paramount to low-latency customers.  With proximity hosting, an ability to get a trade to market faster exists. An understanding of this is also necessary to players not interested in low-latency, and a strategic decision needs to be made on how, or if, to attempt to compete against traders whose orders are arriving first. With the matching engines algorithms set to match some exchange products on a FIFO basis, getting priority in the queue can have an impact on traders, and can mean the difference between getting filled at a price, and losing out on the trade.

Roughly 35 miles from the current point-of-presence for the CME, access to Aurora is now important. The CME’s website lists the providers with access to the facility (http://bit.ly/uTQ3L1) , as well as the services they can provide.  In general, some providers are not offering any connection lower than 1Gb, others offer 100Mb (and possibly lower). On the high end, at least one provider is offering up to 40Gb connections. How they are connecting, route maps and specific latency figures are protected by various NDAs. A wide range of latencies exist in the market, in general, I’ve seen a range of roughly 200 microseconds (us) between the faster and slower connections from the current POP at Cermak to Aurora. Prices also vary significantly, and are not necessarily correlated to the latency figures. I have also heard of some providers

As the facility comes online, we expect to see significant resources pushed to the new facility, complementing existing infrastructure. The debate on where the majority of infrastructure will be located is an interesting one, particularly when firms are trading multiple markets. Each trader will need to evaluate for themselves what makes the most sense for their trading strategy.

Allyn Okun, Born Capital

Allyn is VP, Customer Relationships with Born Capital, focusing on the customer experience throughout the customer life cycle.

Born Capital provides unparalleled technology services to banks, institutions, hedge funds and asset managers.  We service our clients through technical installations in North America, South America, and Europe.

This entry was posted on Monday, November 21st, 2011 at 4:58 pm and is filed under Electronic Edge. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.