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CME Plans Dreaded Technology Upgrades Because High-Frequency Traders Are Jerks

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Beware: The Chicago Mercantile Exchange is "improving its technology." And you know what that means.

CME Group said it will be improving the computers and software that form the backbone of its Globex electronic trading system.

“Our goal is to bring variability as close to zero as possible and we have made significant steps to address latencies related to trade confirmations,” the company said.

Why would it take such an apparently risky step? Because the high-frequency traders have outsmarted everyone again in their ceaseless effort to find new ways to insider-trade.

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.

Using powerful computers, high-speed traders are trying to profit from their ability to detect when their own orders for certain commodities are executed a fraction of a second before the rest of the market sees that data, traders say….

Fast-moving traders can get a head start in looking at key information because they connect directly to the exchange's computers, giving them the data just before it reaches the so-called public tape accessible to everyone else. The exchange connections contain a host of data, of which the advance notice of trade confirmations is only a piece.

CME Group Says It's Improving Technology To Address Time Lags [Bloomberg]
High-Speed Traders Exploit Loophole [WSJ]


CME Begrudgingly Concedes 17½-Hour Day To Grain Traders (It Wasn't Making Any Money During Those Extra Hours, Anyway)

The whiners have won at the Chicago Mercantile Exchange. You won't be able to buy grain or soy futures in the Windy City from 2:15 in the afternoon to 8 at night.*