New Network Turbocharges Chicago-Tokyo Trading

Brian Louis (Bloomberg) -- Traders can turbocharge their trading between Chicago and Tokyo starting in the fourth quarter.

That’s when Intercontinental Exchange Inc., owner of major futures markets and the New York Stock Exchange, will begin selling access to the network built by Go West, a consortium featuring some of the world’s fastest traders. Those include Jump Trading LLC, Virtu Financial Inc. and DRW Holdings LLC’s Vigilant division.

Go West’s wireless towers and submarine cables shave tiny fractions of a second off the time it takes to beam data between those two major trading cities.

The deal between ICE and Go West, announced Thursday, makes ICE a gatekeeper to one of its top competitors. The Go West network touches the data center in suburban Chicago where CME Group Inc.’s exchange is based. Other firms that formed Go West last year are IMC, Optiver, Tower Research and XR Trading. Anyone else wanting to use the network will have to buy access from ICE.

Many automated trading firms engage in arbitrage, or betting that gaps in the prices of two similar things will disappear. Such opportunities exist between the U.S. and Japan, something that may draw customers to the Go West network. For instance, futures contracts on Japan’s Nikkei 225 stock index trade on both CME’s exchange and Tokyo-based Japan Exchange Group Inc.’s market.

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“As the demand for data capacity, speed and security increases, Go West extends our network’s geographical reach and offers a new alternative for customers that require ultra-low latency connectivity between North American and Asian markets,” Jonathan Reeve, global head of connectivity and consolidated feeds at ICE Data Services, said in a statement.