Faster Than Fast: FX Traders Can Now Connect Directly to the CME Network

Neal Brady, director of CME Products and Services and Derek Sammann, managing director, CME Foreign Exchange tell e-Forex about the growing importance of colocated network connectivity in electronic FX trading and how CME LNet meets the demand for millisecond data transport.

First Published: e-Forex Magazine 28 / Case Study / July, 2007

High Speed Execution Is Driving Dramatic FX Growth Trade execution in the blink of an eye – about a half second, or 500 milliseconds – may sound speedy enough to the average person, but for a growing number of foreign exchange (FX) traders, that is far too slow. Many of today’s FX traders are looking for transaction times in double-digit milliseconds, and increasingly focus their trading volumes on only those FX platforms that support this level of speed and efficiency.  It is no coincidence that over the past three years, as the CME Globex platform’s average round-trip time has decreased from 125 to 27 milliseconds, CME FX volume has exploded, increasing from average daily volume of $25 billion in 2004 to over $80 billion per day in 2007. The desire for transactions at nearly light speed stems from the increasing use of algorithmic trading models in the electronic FX market. Until recently, these models were used primarily for trading equities. But as FX has matured into a...continued

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