Parent of the Chicago Mercantile and other exchanges lives on technology as it drives into new markets.
Two tyrants lord over the business technology team at CME Group, and they explain most of what you need to know about its Type A, Saturday-working, never-satisfied culture.
One is volume. The other is speed.
CME is the world's largest derivatives exchange, on which traders swap securities that carry the right to buy or sell a commodity--oil, gold, soybeans, lumber, pigs, dollars, Treasury bills, and much more--at a certain price some time in the future.
In the past five years, CME's trading volume has grown more than 300% a year--from 30 million orders a month in 2004 to 6.5 billion in October last year, when the financial crisis hit its peak. In that same time, the average time for a quote or order to come into and back from CME's data center was collapsed from 180 milliseconds to less than 6. A blink takes about 300 milliseconds.
CME stands for Chicago Mercantile Exchange, a 111-year-old entity that in recent years acquired the Chicago Board of Trade and the New York Mercantile Exchange. In doing so, CME parlayed a pioneering role in electronic trading--it introduced Globex, the first electronic futures trading platform, in 1992--and its once-mundane-looking clearing operation into its top spot among derivative exchanges. "They were the upstart, underdog futures exchange 15 years ago, and now they own the world," says Larry Tabb, CEO of TabbGroup, a financial market research and advisory firm.
And now they own the top spot in the 2009 InformationWeek 500 ranking of business technology innovators.
The company's success hinges on a technology team, 800-strong and led by CIO Kevin Kometer, that must live on the edge of emerging technology--and even drive it, cajoling vendors such as Dell and Hewlett-Packard, AMD and Intel, and Cisco to build what might not look like mass-market products yet. "We're almost playing matchmaker," says John Hart, CME's managing director of technology engineering. Three years ago, for example, CME started work with Verizon and Tellabs to create a metro area Ethernet network that was more point-to-point, not looped, to get far more speed. That went live last year.
Yet until 2008, one of its most precious systems, the core futures trading platform that matches buyers and sellers, was far from leading edge--ultrareliable, but shackled to a legacy system of 1 million lines of code, written for proprietary Sun Solaris servers. New features required long and costly testing, and hardware refreshes cost tens of millions of dollars.
So the IT team rewrote its core futures trading systems--which handled contracts worth $1.2 quadrillion of notional value in 2008--in Java in six months and started migrating them to commodity Linux servers in January. Results: At a leaner 295,000 lines of code, the new platform cut response latency 67% (by 5 milliseconds), and cut maintenance and capital expenses 90%.