CME reacts to WSJ report of timing gaps

[May 02, 2013]  CHICAGO (AP) -- CME Group, the operator of the Chicago Mercantile Exchange, said Wednesday that some discrepancies may exist in its trading platform but that it is continually trying to improve its system after the Wall Street Journal reported that gaps in information timing could benefit some traders.

The newspaper says high-speed traders are using a hidden facet of the Chicago Mercantile Exchange's computer system to trade on the direction of the futures market before other investors get the same information.

The report, based on information from unnamed people familiar with the matter and reviews of trading records by The Wall Street Journal, found that the advantage often is just one to 10 milliseconds. But that is enough time for computer-driven traders to detect when their own orders for certain commodities are executed and take further action before the rest of the market sees that data.

CME said there can be instances of inconsistencies with any technology and it is continually working to improve its own, including reducing any variability between the time a firm or customer receives its trade confirmation and it appears on the public data feed.

The company said that out of the more than 300 million messages that come into its platform each day, there may be times when customers can experience a latency of a few milliseconds between when they receive their trade confirmations and when that information is accessible on the public feed.

CME said, though, that these instances are not consistent and vary across asset classes.

The company said its goal is to bring variability as close to zero as possible. It has already taken significant steps to address latencies related to trade confirmations already and will be making additional hardware, software and architectural upgrades through the remainder of the year to reach this goal.

CME's stock edged down 33 cents, or 0.5 percent, to $60.54, in line with a broad decline in the market.

[Associated Press]

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