CME Group CIO - The challenges of upgrading an electronic trading platform to Linux

CME Group conceived the idea of creating an electronic trading platform in 1987. It eventually launched Globex as a ‘low impact’ means of providing after-hours market coverage for traders in London in 1992, targeting those who wanted to buy and sell whilst operations in Chicago were asleep.


CME Group conceived the idea of creating an electronic trading platform in 1987. It eventually launched Globex as a ‘low impact’ means of providing after-hours market coverage for traders in London in 1992, targeting those who wanted to buy and sell whilst operations in Chicago were asleep.

Fast forward some 20 years later, and several of acquisitions, and CME Globex is a global player in a number of asset classes, including grains, metals and energy.

Although CME connects to more than 85 countries and has hundreds of thousands of customers, London is its largest international network hub, and is where CME’s Group CIO, Kevin Kometer, met with Computerworld UK to explain how the exchange’s technology has developed over the years, what challenges development brings and what plans it has going forward.

“Globex first started running on Tandem NonStop systems, which are similar to mainframes and are very capable and high-powered machines. However, we recently migrated the final component of the exchange, the match engine, off of them to boost performance,” says Kometer.

CME’s electronic trading platform is made up of three main components – order entry, the matching engine and market data. Kometer has been overseeing the project to move all of these components off the Tandem systems onto Linux.

The order entry component takes orders and routes them to the match engine, which takes the buys and sells, creates the market and matches them. The final component sees the market data sent out worldwide. Each product set, such as grain, has its own matching engine, which can also be broken down into smaller products, such as ‘corn in December’.

“So we started with all these different parts running on one big machine, with all these different markets running on one system. We gradually moved the order entry and market data parts off and just kept the match engine on the original system,” explains Kometer.

“However, we quickly realised we could achieve much better performance, better reliability and greater cost efficiencies if we could run them all on commodity hardware, such as HP and Dell. So, we eventually moved all those Tandem machines onto Linux systems, and as soon as we did that we increased performance by a magnitude.”

CME completed the migration of the entire Globex platform onto Linux boxes last year, “which has reduced our latency from seconds down to 4 – 6 milliseconds”, Kometer adds.

But the company’s technology developments do not stop there. Kometer says that when you are running technology for an exchange you “don’t just stop making improvements”, as advancements in technology mean that you can always work on capacity, scalability and performance.

Having now moved to Linux, CME is looking to refresh the order entry and market data parts, as well as upgrade the exchange’s network infrastructure.

“By year-end we want to go back and reassess order entry and market data, rewrite them and make the software better, more efficient. We are consolidating some components and will be put it on the next generation of hardware,” says Kometer.

“We are also creating a separate network just for trading. So we are pulling all of that out of our general purpose network and creating a brand new one just for Globex, which will run on Cisco kit and be much faster.”

He adds: “The main reason that we make these changes is that we want to create consistent performance for our customers. There are always things out there that can make it faster, but we are more concerned with consistency.”

Given the number of IT failures in the financial sector of late, such as the Facebook IPO debacle, which has left Nasdaq facing a number of law suits and losses in the region of hundreds of millions of dollars, upgrades aren’t to be taken lightly in an exchange environment.

Kometer explains that one of the main challenges with improving an electronic trading platform’s technology is testing, where he estimates that more than half of a project’s entire lifecycle is spent trying to make sure all problems are ironed out before any new system goes live.

“The development time is relatively small compared to the amount of testing you put in. The good news is that we have an awful lot of automated testing. We are able to use whatever tests we have put in place for Globex over the years to do automated testing, which really helps ensure we don’t have any functional issues,” he says.

“We spend a significant amount of time doing reliability testing, failing switches, failing machines – pretty much every permutation that we can actually control.”

Globex, before going live with a new technology, also puts it into a customer testing area, which, although it wouldn’t expect to make any functional changes, allows users to get a feel for the performance and dynamics of the new environment.

It will also then allow customers to test it on a Saturday in a production environment, which Kometer says has a different look and feel, due to its scale. CME runs through a number of ‘mock’ trading sessions in this production environment, which not only allows users to interface with the new tech, but also allows them to trade against each other to replicate a “real trading day”.

“We will always phase things in, we move markets over slowly, and we only allow customers to move a certain number of their order entry sessions into a new environment, which means that a significant number remain in the legacy for a certain period,” says Kometer.

“As a result, if something unforeseen happens, then we are only putting one market at risk for that period, or even a small subset of that market. By the time you have moved all the markets across you have run for a number of weeks in that environment and ferretted out all the issues.”

CME Globex celebrates its 20-year anniversary this year, over which time Kometer says the company has dramatically improved. This is a legacy that Kometer expects to continue.

“Through that long history there are a number of things that have occurred for CME that has increased its distribution and its asset classes.

“There has been a 20-year history of making technological improvements and obviously we don’t just stop now, we will probably never stop,” says Kometer.

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