Chicago Board Options Exchange Selects Corvil to Optimise Market Data Feeds

The Chicago Board Options Exchange (CBOE) is replacing manual processes for market data monitoring with Corvil’s latency management system, CorvilNet, in an effort to optimise its market data infrastructure for low latency. CBOE is believed to have looked at competitive products from companies such as NetScout, Niksun, Correlix and SeaNet, before selecting the Corvil solution to deploy in its market data path in order to monitor latency and bandwidth, and identify potential market data disruptions.

This is Corvil’s first contract with CBOE, which will initially use CorvilNet for precision measurement of one way latency and loss for the Options Price Reporting Authority (Opra) market data feed across its internal infrastructure and to measure gap detection for Opra and other CBOE data feeds. CorvilNet’s application programming interface will be used to access bandwidth loss statistics for internal business reporting.

Gerald O’Connell, CBOE executive vice president of systems and CIO, notes gap detection and customised live dashboards as key features of CorvilNet, with gap detection allowing CBOE to see where loss might be occurring anywhere in the path through its network and live dashboards providing real-time customised views of items that are important to the CBOE environment.

“The implementation of the Corvil solution into our environment will allow us to achieve automated insight into the quality of our market data streams,” explains O’Connell. “This saves us from performing many manual processes that take a great amount of time and energy for the results we need to provide. Consistent data, automatically provided, means we can make the correct recommendations to benefit our clients.”

Donal O’Sullivan, vice president of product management at Corvil, notes a shift from in-house developed latency management systems to vendor solutions over the past three years, as products have become more reasonably priced and competitive to home grown solutions. He says: “Our win at the CBOE results from CorvilNet’s ability to scale and manage large data volumes. It also has more advanced performance analytics that can present information in real time to the user compared to other solutions.”

Corvil CEO Donal Byrne, adds: “Low latency distribution of market data has become one of the most important factors that determine success in high frequency trading. When distributing market data it is equally important to protect against packet loss. By deploying CorvilNet, the CBOE is able to deal with market data microbursts while assuring latency and loss service levels for clients.”

CBOE has trialled CorvilNet 6.2, the latest release made available in December 2010 (see more here), with real production traffic and is in the process of installing a CorvilNet appliance in a rack at its data centre in Chicago. With deployment help from Corvil, it is expected to go live this month, first monitoring and optimising the Opra market data feed, but later scrutinising other feeds. Corvil supports and offers analysis for all the main market data feeds in North America, including all options feeds.

While CBOE will start to use CorvilNet within its own boundaries, Corvil hopes it will go further and use the appliance to monitor market data services delivered to clients. In support of this, it notes a number of unnamed inter-party users and numerous exchange clients including the New York Stock Exchange, Deutsche Bourse and the London Stock Exchange.

“CorvilNet can manage latency for both market data flow and order flow. Some organisations use it for one or the other, some use it for both,” says O’Sullivan. “At the CBOE, the most immediate requirement was market data quality. This created the need to find a way to manage market data proactively and reduce operational costs.”

CBOE has yet to decide on the optimal speed at which it wants to run optimised market data services, but O’Sullivan cautions: “First, it is necessary to measure and establish what is happening in the network. Then it is possible to consider what might be realistic in terms of speed and cost to compete.”

Claiming around 20 more potential contracts in the pipeline and a good conversion rate, O’Sullivan says: “Corvil’s products were initially designed to optimise high frequency trading performance. That was particularly important to quantitative hedge funds, market makers and proprietary traders. Now, everybody is interested in high performance trading and total cost analysis, so there is growing interest for products like ours.”

While unwilling to be drawn on detail, O’Sullivan describes an end of March upgrade to CorvilNet as relevant to the company’s entire customer base and a “big step forward” for the product.