Chicago Mercantile Exchange’s CIO is constantly monitoring the support technology of the US’s biggest futures exchange. The tech function has to cope with growing trading volumes and is also seen as a route to expansion. Dan Barnes reports.
“Our customers are really looking for two things,” says Jim Krause, CIO at the Chicago Mercantile Exchange (CME, or the ‘Merc’). “Speed and reliability”. With the future of exchanges being speculated upon so often these days – as targets for takeover, for system failures, for merging with electronic marketplaces – he believes that it is important that traders are able to feel a degree of certainty in their work.
“When you’re trading you are exposing yourself to risk so the last thing you want is to increase that unnecessarily. If a trader hits a button they want the result to be predictable,” he says.
Constant analysis of the technology supporting the exchange keeps Mr Krause busy. For any one trade that occurs, he must ensure that there are recovery methods should anything go wrong, and that means understanding everything that could go wrong, regardless of the path the trade takes. “At one time we identified 75 individual potential points of failure [between each customer to CME], from hardware issues such as cables being disconnected, to software problems such as files failing to transfer from one system to the next,” he says. “If there is a change in trading patterns then we must keep on top of it so that the customer can complete the trade under all circumstances.”
Pressure on support
Naturally, change is afoot at the CME with the growth in electronic trading driving growth at the biggest US futures exchange, trading volumes having increased by almost 65% from 2004 to 2005 on its Globex platform. This rise puts increasing pressure on the support function and has led Mr Krause onto a programme for change based on cost discipline, reducing the underlying hardware costs through the use of commoditised servers on a Linux-based platform and running tertiary back-up for product critical systems.
“We’re developing a scaleable architecture that allows us to grow quickly and improve redundancy,” he says.
The pace of change is such that, along with his architectural team, Mr Krause is constantly checking on the latest kit that shows potential. The CME has a technology laboratory that is used for ‘test driving’ new technologies, such as grid computing (“this could be a shift as major as moving to client server from mainframe”), and evaluating their possible use. “Grid can be really good although it is really for intense calculations. For us the dynamic is different so I can’t see an application yet,” he says.
According to Mr Krause, the exchange is becoming an early adopter, working with multiple vendors as part of customer/user groups and becoming more involved in research and development visits.
Expansion route
Technology is so important to supporting the exchange’s business that it is not surprising that it is seen as the route to expansion as well. The CME has recently rolled out hubs in cities across Europe to provide access to the Globex trading platform. “We had to spend a lot of money to get a really big pipe [a large amount of bandwidth] across the Atlantic to ensure it would be cost effective and we’re also running two data centres in London so we have solid redundancy.”
By offering access to European and Asian traders, Mr Krause believes that the CME can gain customer share. The exchange market is so full of uncertainty right now that Mr Krause’s tech vision may well give the CME the edge.
CAREER HISTORY:
2004: Managing director and CIO, CME
2001: Managing director, operations and enterprise computing, CME
1998: Senior vice-president of systems development, CME, and later senior vice-president of enterprise computing
1996: Vice-president, systems development/systems development-design and integration, CME
1990: Vice-president, systems development, CME
1989: Vice-president of clearing systems, CME
1986: Director, clearing, regulatory, administration systems/system development, CME
1980: MCC Powers
1977: Pullman Inc
1977: Shure Brothers
1976: MBA degree in finance and accounting from Southern Illinois University
1970: Graduated with a bachelor’s degree in computer sciences from Michigan State University
