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By Tom Groenfeldt
Chicago’s securities exchanges have helped make the city a major site of data centers for financial firms. But the city’s robust fiber infrastructure and openness to working with data centers have made it a popular selection for a variety of industries.
The Savvis data center at 360 Cermak Road in Chicago is designed for financial services firms, providing direct connections to the Chicago Mercantile Exchange and Intercontinental Exchange for high-frequency trading, where the time it takes an order to reach an exchange is measured in milliseconds. As more traders have moved to high-frequency trading using algorithms, the time lag, or latency, across networks to the exchange has become increasingly important.
The latency between New York and Chicago is 17 milliseconds, so a firm trading on the CME and taking advantage of the direct connectivity in the Savvis center has a significant speed advantage. Savvis is one of three approved providers to the Intercontinental Exchange and CME.
Varghese Thomas, global head of financial services at Savvis, said that exchanges have responded by offering direct connectivity to their computers by locating their market data operations in a facility like Savvis provides, or by renting space in a data center owned by the exchange. The direct connectivity is called co-location. Responding to market demand, Savvis has just announced an expansion of the Cermak data center.
Savvis in Cermak does more than rent real estate -- it is in the financial services infrastructure business, said Thomas.
“We provide market data to other markets, connectivity to the exchanges and infrastructure solutions where you can take in your own hardware and run your own turnkey solution,” he said. “We also offer managed network to hosting to co-location. That makes it easier for clients to outsource environments for electronic trading to us. If they go to simple co-location, they have to do everything on their own.”
In addition to concerns about latency which might strike outsiders as extreme, financial services firms have two other basic requirements in a data center (assuming that security has been addressed): power and network availability.
Thomas said plenty of power is available in Chicago. In addition, Cermak has connections to more than 200 data networks, so the exchanges can connect to anywhere in the world through regional carriers. Most of the carriers are increasing their bandwidth to meet the growing data demands. They have also optimized their pipes to minimize the number of hops between key centers, such as New York and Chicago, because each hop adds latency. For firms that don’t need to measure latency in milliseconds, Savvis provides hosting and cloud services and has additional data centers in the Chicago area, with one in Elk Grove near O’Hare Airport.
But it’s not just financial services infrastructure companies that have data centers in Chicago and the surrounding suburbs. Microsoft has built one of the most powerful facilities in the world, with about 700,000 square feet, packed with containers that each contain 1,800 to 2,500 servers. If something goes wrong with servers in a container, the entire container can be replaced in about seven hours. Equinix also has a major data center in the area while Digital Realty Trust has two sizable facilities.
Chicago’s location as a network access point (NAP) means the city offers businesses excellent Internet communications, said Dan Lyne, director of technology development for World Business Chicago, a public-private partnership that helps companies relocate and expand in the city. To some extent, the city’s robust fiber infrastructure is the happy result of history -- the city was a rail hub and one of the easiest ways to lay fiber is along a rail right-of-way. But the city was also quicker than most to realize the importance of fiber and the Internet for economic development. It adapted building codes and planning rules to support the development of data centers. Digital Realty Trust has a 1 million square foot center in what was the old R.R. Donnelly printing plant plus another large center.