NYC-Chicago Microwave Link Nears Turn-On

Terry Flanagan

A high-speed microwave link between CME Group’s co-location data center in Aurora, Illinois and a similar Nasdaq OMX facility in Carteret, New Jersey is expected to go live in several weeks, according to a CME executive.

The CME-Nasdaq joint venture will slice 36% of the connection time from competing fiber connections across the 730-plus miles between the centers, located outside Chicago and New York. That’s good news for the speed-oriented traders for whom milliseconds can make the difference between a winning and a losing trade.

Testing has gone well for availability and latency as the exchanges looked closely at market peaks for performance assurance, said Craig Mohan, CME’s managing director for co-location and data center services.  Recent thunderstorms have had some impact, though the service performed as expected, Mohan told Markets Media.

CME aims to ensure service at a reasonable price point for the trading entities, managed hosting providers and other intermediaries that utilize its microwave link and co-lo facilities. “Our goal is to make the data center available to our customers for market efficiency and to make it a core of their infrastructure,” Mohan said.

“We opened the CME Co-Location Services at the beginning of last year after working with customers to understand their needs,” including how to most efficiently manage the cost pressures of data storage and space utility for their business, Mohan said.  The exchange is focusing on bringing data to the center from many venues for distribution, and is in early the early stages of developing storage for use in future analysis of tick data and other information.

In addition to determining how it can more efficiently connect end users, CME says its value proposition includes non-discriminatory and transparent pricing and environmentally-based power and cooling efficiencies.

Mohan noted that while all regulation is foremost on the minds of its Chicago-area hedge funds, investment banks, and proprietary trading clients, there has been no recent development concerning the CFTC’s co-lo rules proposal dating back to June 2010. “We do expect (enactment) to happen at some point,” he said.

CME has no specific plans for additional links beyond the completion of the New Jersey to Aurora thruway, but it does see more lines between NJ and Aurora and between Aurora and downtown Chicago (E. Cermak Rd.) data centers. “Both corridors are actively being built up,” Mohan said.

For Chicago-based market participants, there are two main data centers to connect through, and market operators say telecom carriers have capably connected the two centers with sufficient bandwidth.  Firms are putting up their own microwave and millimeter technologies between Aurora and Chicago.

Said Mohan, “there are some interesting things people are doing in that environment to continue to improve.”



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