CBOE's CIO Ventures Into Stock Trading With CBOEdirect Match Engine
Chicago Board Options Exchange
400 South LaSalle Street
Chicago, IL 60605
SIZE OF FIRM:
2.7 million contracts a day (YTD through June).
PREVIOUS POSITIONS:
CBOE, SVP in charge of all development; Hyatt Hotels, developed worldwide reservation systems.
EDUCATION:
B.S. in mathematics from Lewis University (Chicago) and a law degree from John Marshall Law School (Chicago).
WHO WAS YOUR MENTOR?
Emmett Zahn, former CIO at CBOE. He and I worked closely together in the late '70s and early '80s, and he hired me back at the CBOE in the 1980s.
WHAT WORK EXPERIENCE HAS HAD THE MOST LASTING IMPRESSION ON YOUR CAREER?
Having the fastest, most available matching engine [CBOEdirect] in the world has been a desire and goal on my part. I think we have that now, but it took a tremendous amount of work to achieve and it continues to impress me every day.
LAST GOOD BOOK READ:
"The World Is Flat," by Thomas Friedman.
Top 3 Current Projects
Stock System Launch
Objective:
To launch the CBOE Stock System this fall. We built CBOEdirect, our match engine, to run options, futures and stocks. In the past few years, we've done extensive work on options, and we now run two futures exchanges (CBOE Futures Exchange and One Chicago,our joint venture with CBOT and CME) on CBOE Direct. Since CBOE already is an SEC- regulated stock exchange, we're going to venture into stocks with this technology.
Trade Match Migration
Objective:
To migrate the trade-matching application from a legacy mainframe to open systems. The trade matching application is used extensively on our trading floor to put matching information together for the Options Clearing Corp. Our goal is to retire mainframes here at the exchange. We can run the application on any Unix server; we're currently using Fujitsu or Sun Solaris-based servers, but we could use Linux as well.
Index Hybrid System
Objective:
Migrating CBOE's largest index products to our Hybrid platform, where they can be traded either electronically or negotiated on the floor. Hybrid is an electronic system that is integrated with our floor technology and maintains the pit support that these products require.
2007 Initiatives
Mainframe Migration Project
Our goal is to completely migrate all of the mainframe applications to the new open systems technology by the end of 2007. We're also migrating applications that we have had on proprietary Stratus computers for 20 years over to the new technology.
Vitals
IT Budget:
$70 million in 2006.
Size of Technology Team:
We host multiple exchanges with a staff of 250, which is down from closer to 300 at this time last year. We actually host the National Stock Exchange (NSX), One Chicago and CBOE Futures Exchange (CFE), and we're in the process of hosting HedgeStreet, a derivatives exchange. We require less staff with the new technology.
Percent of IT Projects Outsourced:
CBOE has never outsourced major projects. All of our development is designed, built and implemented by staff entirely in-house. But I'm in the process of interviewing candidates for overseas consulting. I'm looking at people who represent resources in India to help us with labor. We're doing a little of that with testing, and I've just started discussions about development.
Key Technology Partners:
Savvis for major circuits to hubs in New York and also as a provider for our disaster recovery site. Other partners include Fujitsu, Sun Microsystems, Oracle, IBM, Stratus for legacy system, messaging from Talarian (part of Tibco), plus standard packages such as Remedy, a tracking system used in operations.
Success Metrics:
N/A
An important trend is outsourcing -- at least, the ability to tap resources 24 hours a day, as we're hoping to do in the off hours. Others have done it ahead of me and it is something I need to explore.
Another trend is algorithmic trading, which is very popular in the stock world and has evolved in the options and futures world as well. It requires us to have match engines capable of receiving huge amounts of liquidity from people who employ these types of techniques. Large options liquidity providers need to get into representing their liquidity across different asset classes -- stocks, options and futures -- and we need to be able to take that liquidity.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
Tweet This