In a drive to target the growing business of high-frequency trading, the CME (Chicago Mercantile Exchange) is planning to open a new data center in the Chicago suburbs in early 2012. Heading the development of the unit will be Craig Mohan, recently hired from Citadel Investment Group.
The new data center will give exchange members the ability to co-locate their servers alongside the exchange’s own machines, thus minimizing the latency derived from sending and receiving price quotes and order messages. This is an important factor for high-frequency traders, who typically send thousands of orders per second from their “black box” trading computers to the exchange’s matching engines. To trade profitably, high frequency traders need to reduce latency to an absolute minimum.