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Chicago Exchange makes Linux call

The Chicago Mercantile Exchange is moving to Intel-based servers running Linux

By Patrick Thibodeau
October 25, 2004 12:00 PM ET

Computerworld - In a quiet corner office of Chicago Mercantile Exchange Inc., high above the steady roar of shouting traders on the exchange floor, Joseph Panfil, director of distributed computing, is focused on the smallest increments of time.
There is a direct relationship between system performance and trading volume at the CME, also known as the Merc. By reducing the amount of time it takes to process a trade, trading volume can increase. The more trades there are, the more trading fees the exchange collects.
Time is the bottom-line metric of Panfil's world. "Everything in the trading world is a matter of split seconds," he says.
Panfil is part of a team implementing system changes that have so far reduced round-trip trading times from about 1,800 milliseconds in 1998 to 350 milliseconds today. Five trades can now be conducted in the time it used to take to complete one.
To cut times further and reduce IT costs, the CME is pursuing a major IT overhaul that involves a gradual adoption of the Linux operating system on Intel-based servers while moving off Sun Microsystems Inc.'s Solaris and Sparc hardware. The conversion began about a year ago and is now 30% complete.
Complex Architecture
The CME's architecture consists of three major technologies: Unix and Linux systems handle the input paths for orders and output paths for quotes. Hewlett-Packard Co. NonStop servers send out order confirmations and quotes. And IBM mainframes are responsible for "clearing," or processing, of all trades.

Joseph Panfil of Chicago Mercantile Exchange Inc.
Joseph Panfil of Chicago Mercantile Exchange Inc.
Image Credit: Andy Goodwin
Traders still work shoulder to shoulder on the CME's floor, but since June, the majority of trades have been handled by the Merc's electronic trading system, Globex. The Merc began electronic trading in the early 1990s, using a third-party system to support after-hours trading. In 1998, it introduced its own system.
Customers want reliability and speed in electronic trading environments, says James Krause, the Merc's CIO. Balancing those two priorities means that the exchange, while interested in performance-improving technologies, isn't likely to be the first adopter of a new system. "Whatever we do, we have to make it work right and make sure it's fast," Krause says.
Trading times have been improved by making applications more responsive, upgrading server CPUs and undertaking architectural changes to reduce the number of hops in the path of a trade. For instance, the process previously used to include a disk write, but that has been moved out of the direct path of a trade.
The decision to use Linux and move to fast Intel Corp. chips also led to a


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