CME's CIO Expands Electronic Trading Into NYMEX Energy Contracts, Options and FX
Chicago Mercantile Exchange
20 South Wacker Drive
Chicago, IL 60606
SIZE OF FIRM:
On average, 5.3 million contracts were traded daily as of May 2006.
PREVIOUS POSITIONS:
During his 21 years at CME, Krause has held various positions in systems development and clearing, including managing director of operations and enterprise computing, and director of clearing, regulatory, administration systems/system development. During the 1990s, he was responsible for the design, development and implementation of the CME Globex electronic trading platform and the Clearing 21 clearing system. Prior to joining CME in 1985 , Krause held positions at MCC Powers, Pullman Inc. and Shure Brothers.
EDUCATION:
B.S. in computer science from Michigan State University and an M.B.A. in finance and accounting from Southern Illinois University.
WHO WAS YOUR MENTOR?
I worked for a lot of different bosses and a lot of people helped me along the way. I developed a philosophy over time for working hard and treating people as individuals with a certain amount of respect.
WHAT WORK EXPERIENCE HAS HAD THE MOST LASTING IMPRESSION ON YOUR CAREER?
Working on electronic trading at the CME, which was the first exchange to do so, in 1987.
Top 3 Current Projects
Electronic Energy Trading
Objective:
To become the sole provider for NYMEX electronic trading of energy contracts that launched in June 2006. There will be various other pieces coming along throughout the year.
Options Trading
Objective:
Developing the functionality to trade options on futures electronically. The CME is No. 1 in the world in daily futures trading and No. 2 in options. Whereas the percentage of futures volume traded electronically is in the high 80s, in options, less than 25 percent is traded electronically. So developing that type of functionality is the second biggest priority.
FXMarketSpace
Objective:
This is a 50/50 joint venture that CME has developed in conjunction with Reuters to use the Globex platform to trade the cash foreign exchange currencies on Globex.
2007 Initiatives
The Options Initiative
To increase market share in trading options electronically. This will continue into 2007.
FXMarketSpace
To enter into more-complicated cash FX instruments.
Transaction Growth
With transactions growing at a compounded rate of about 300 percent per year, the goal is to keep the capacity up and to maintain the high level of customer satisfaction that has made Globex successful.
Reliability
The goal is to provide customers with fast and reliable systems, because speed and reliability are the most important things to customers. Since CME trades 24 hours a day, five days a week -- the only exchange to do that -- it needs to have a lot of reliability and speed.
Vitals
IT Budget:
N/A
Size of Technology Team:
More than 500 people.
Percent of IT Projects Outsourced:
On a project-by-project basis, CME uses consultants to augment the staff, either to meet time-to-market requirements or bring in some specific skill. Outsourcing is around 10 percent if consultants are included.
Key Technology Partners:
Hewlett-Packard for servers and matching technology, IBM for clearing systems and Sun Microsystems for some servers. For databases, both Oracle and IBM for DB2. For Linux, CME uses Red Hat.
Success Metrics:
Obviously, time to market always is critical. I also come back to customer satisfaction -- you usually see that in increased trading volume. You come up with a new product or new trading capability -- how well people use that, etc., is how you would look at the success of a product.
Grid computing, blade servers and wireless can continue to help us improve reliability and make things faster. Obviously, we're moving toward total electronic trading, and if those technologies help us make things more reliable and faster, expand the distribution -- wireless has the capability of expanding distribution around the world -- and provide more bandwidth, we'll look at all of those things. I think the vision comes around continued growth of electronic trading.
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