CME Group and Google to Build Co-Location Facility for Financial Trading Systems in Aurora

CME Group and Google have announced plans to construct a co-location facility in Aurora, Illinois, for financial trading systems. The facility, which will be rented to CME customers, aims to provide instant access to markets and data, offering advantages measured in nanoseconds. The center will be located adjacent to CME’s existing data hub, serving as a nerve center for the world’s leading marketplace for futures and options.

The co-location facility, referred to as an “ultra-low-latency” network, is expected to offer various benefits to clients, including the ability to leverage Google Cloud data and artificial intelligence for trading strategy experimentation. CME Group Chairman and CEO Terry Duffy hailed the partnership as a significant step forward in revolutionizing the industry.

The new facility will also serve as a disaster recovery backup, with a location in Dallas identified for this purpose. Clients will have the option to manage their own space within the building or hire Google Cloud for that purpose. Construction is set to commence this year, and while no projected completion date has been provided, clients will be given at least 18 months to plan for the transition.

The co-location facility will handle all asset classes at CME, except for cash markets such as dairy products. The project underscores the dominance of algorithms and high-speed trading in futures trading, as the industry has transitioned from open-outcry trading to computer networks.

The expansion in Aurora also highlights the potential challenges CME Group would face if Illinois were to implement a tax on futures transactions. While Governor J.B. Pritzker has opposed such a tax, the idea of a city-imposed tax on traders has been suggested by allies of Mayor Brandon Johnson. However, CME can circumvent this by locating its servers outside of Chicago, thereby avoiding any potential tax implications.

CME Group, with a market value of approximately $70 billion, previously partnered with Google in 2021 to expand cloud computing into futures trading. The partnership included a $1 billion investment by Google in CME through the purchase of nonvoting preferred shares. Google is also making a significant investment in the Chicago area, as it plans to acquire a building in the Loop for its Chicago headquarters.

Concerns regarding cybersecurity and data privacy have been addressed by CME with its federal regulator, the Commodities Futures Trading Commission. CME has filed a report outlining security enhancements to its systems, emphasizing the strength and maturity of its information security programs.

CME Group spokeswoman Laurie Bischel reassured clients that their data privacy and trading strategies are top priorities. She stated that clients always own their own data, and Google Cloud processes their data according to client instructions. Bischel further highlighted that Google Cloud provides tools for customers to easily transfer their data if they choose to discontinue using Google Cloud services.