CBOE sets sights on vector
The arms race of trading technology is showing no signs of stopping in the exchange world. CBOE Holdings, the parent company of the Chicago Board Options Exchange, announced in May that it plans to phase out its existing platform, even though it is only three years old, and replace it with a brand new trading platform with state-of-the art technology.
Ed Tilly, the company’s chief executive officer, explained that the new platform, called Vector, will have a completely new architecture built from scratch that will be much more efficient than Command, the existing platform, which is a modified version of a system that was first introduced more than a decade ago. Tilly added that he expects Vector’s processing speed to “match if not exceed” all other platforms in place today.
“We are developing an advanced architecture that delivers best-in-class functionality, low latency, ease of use, and trading efficiency,” Tilly said. “The new platform will be engineered to provide greatly increased transaction speeds while handling constantly increasing message traffic and industry demand for additional functionality, such as risk controls.”
To build the new platform, the company is drawing on in-house trading and technology expertise and has brought in technology specialists with experience in trade engine technology. The company expects to migrate CFE, its futures exchange subsidiary, to Vector in the second half of 2016, with its other two exchanges, CBOE and C2, following soon after that.
A key feature of the new platform will be its ability to handle multiple trading models and product types. As with the company’s existing platform, Vector will support both screen-based and floor trading on CBOE as well as fully electronic trading on CFE and C2. The platform also will support a fully integrated complex order book and several matching algorithms. Last but far from least, the new platform will have the capacity to handle the enormous number of order messages that are generated in today’s electronic markets. Tilly did not disclose the new platform’s projected capacity, but Command, its existing platform, can handle as many as one million transactions per second.
“We view it [Vector] as both a state-of-the art trading platform and [an] engine for growth, designed for maximum flexibility and scalability,” Tilly said, adding that it will enable the company to quickly respond to changes in the marketplace and efficiently roll out new products and trading opportunities.
