Rob Daly
Traders Magazine Online News

OPINION: CAT NMS is Out of Options

The SROs have no choice but to meet their deadlines.

Traders Poll

Are you ready to comply with the new updates required by the amended Rule 606?

Free Site Registration

January 1, 2002

Ramping Up In The Midwest: Chicago Stock Exchange's New Net

By Brian O'Connell

Also in this article

  • Ramping Up In The Midwest: Chicago Stock Exchange's New Net
  • Page 2

For the Chicago Stock Exchange the New Year started on super speed - thanks to a new broadband in-house Internet platform.

The platform, an Ethernet-based web service, replaces the exchange's old T-1 lines.

"It is one of those massive, fundamental shifts that occurs every several years," said Charles Rutstein, an analyst at Forrester Research. "The shift is from very complex, old networking technologies, to much simpler and much cheaper networking technologies."

This fundamental shift was no doubt prompted by the exchange's 450 members - floor brokers, specialists and market makers - who use the Internet extensively for company and customer communications and for market research.

The exchange's previous T-1 line was frequently jammed with traffic, causing noticeable service slowdowns. By contrast, the Ethernet-based broadband service, supplied by San Francisco-based Yipes Communications, Inc., gives CHX members speedy 10 Megabits-per-second access to the Internet.

"We started looking for Internet access about a year ago, when just about everybody was looking at broadband," said Krysia Jacobs, director of information services at the CHX. "Since we don't basically deal directly with the public and didn't need an e-commerce web site, we had some leeway in providing members much faster way to access for their e-mail and research. We were running out of bandwidth. T-1 wasn't terribly reliable."

The decision to adapt an Ethernet-based web platform was not difficult, adds David Coder, manager of networks at the CHX. "Ethernet is simple and easy," he said. "You just plug it in and turn it on."

Another factor in the exchange's decision was the ability to crank up network speed from 1 Mbps to 1 Gbps, in 1 Mbps increments. "We wanted to be able to turn up the knob in case we develop future bandwidth-intensive applications," Coder said.

That should be a big improvement over the CHX's T-1 lines, which are restricted to fixed bandwidths and can take months to upgrade. "So right now, slowdowns are a thing of the past," Coder said.

Jacobs noted that the new broadband platform is not linked to the CHX's electronic trading platform, which recently underwent a facelift. "Our Internet systems are privately dedicated," she said. "We're not looking to use it to trade. Maybe down the road we could look at a virtual private network (VPN) but that's not on the table right now."

"We just wanted to give our traders faster access to the web so they could go out and gather news and research and do e-mail," she added.

Crank It Up

Yipes says the key to success for a trading exchange is an ability to change data distribution capabilities on the fly - something that T-1 isn't known for. "Flexible bandwidth, from one Megabyte to one Gigabyte, is appealing to the Chicago Stock Exchange," said Ron Young, co-founder of Yipes Communications. "Now the exchange can increase its bandwidth anytime, depending on trading volumes and how busy it is. It used to take weeks to do that at the CHX. Now it only takes three seconds. There are a lot of flexible options."