CME Group and Google join forces on data center expansion in Aurora

Expanding on a partnership launched in 2021, exchange operator CME Group and Google will build a center in Aurora for financial trading systems, the companies said Wednesday.

The so-called co-location facility will be rented to CME customers who prize instant access to markets and data to gain advantages measured in the nanoseconds. It will adjoin CME’s own data hub, a nerve center for the world’s leading marketplace for futures and options. The proximity minimizes the time for trades to be executed.

Chicago-based CME said the “ultra-low-latency” network will yield benefits for clients, including the ability to use Google Cloud data and artificial intelligence to experiment with trading strategies.

“This is a significant step forward in our partnership with Google Cloud that is revolutionizing our industry,” said CME Group Chairman and Chief Executive Officer Terry Duffy in a news release.

He said the facility “will extend the benefits we can provide to our clients through next-generation cloud technology, expanded access and efficiencies, a broader range of customized connectivity options and faster product development, with minimal disruption to their current operations.”

Duffy said a location in Dallas will serve as a disaster recovery backup.

CME said its clients can manage their own space in the building or hire Google Cloud for that purpose.

The building, typical of data centers as essentially a low-slung box with sparse or no windows, will go up next to CME’s current operation at 2905 Diehl Road, about 35 miles from the company’s downtown headquarters.

The project illustrates how algorithms and unimaginable speed dominate futures trading.

Long ago, futures exchanges defined Chicago’s global business image with their open-outcry style of traders yelling and hand-signaling on huge floors.

Switching to computer networks, the business has gotten larger and more global, even as its physical presence in downtown Chicago has nearly vanished.

On another level, the Aurora expansion shows it would be hard for CME to pull up stakes and leave the region if Illinois ever adopts a tax on futures transactions. Gov. J.B. Pritzker has opposed that, though, and the idea has made no headway in the Legislature.

Allies of Mayor Brandon Johnson have called for the city to impose its own tax on traders, but CME can avoid that with its servers outside Chicago. Duffy has threatened to move the company's headquarters at 20 S. Wacker Drive, if necessary, to skirt any tax.

CME said construction in Aurora will begin this year. It did not give a projected completion date, but said clients will get at least 18 months to plan for moving in. The new building will handle all asset classes at CME except cash markets such as for dairy products.

The company includes operations of the old Chicago Board of Trade and Chicago Mercantile Exchange. Its shares are publicly traded with a market value of about $70 billion.

CME and Google signed a 10-year deal in 2021 to expand cloud computing into futures trading. It included a $1 billion Google investment in CME via the purchase of nonvoting preferred shares.

In another big investment in the Chicago area, Google plans to buy the James R. Thompson Center in the Loop for its Chicago headquarters, which is undergoing a large renovation.

Google is part of the Alphabet holding company. Its role in handling trading data has raised questions about cybersecurity and data privacy. CME has addressed those concerns with its federal regulator, the Commodities Futures Trading Commission.

A year ago, CME filed a report with the agency that outlined security enhancements to its systems. “CME is confident in the strength and maturity of its information security programs, but also recognizes that security capabilities and standards must continue to advance as threats evolve,” its report said.

The CFTC did not respond to a request for comment.

CME spokeswoman Laurie Bischel said in an email, “With Google Cloud, clients always own their own data. The privacy of clients' trading strategies and data is our top priority, and Google Cloud processes their data according to client instructions. How the data resides in Google Cloud — data segregation, controls by region, key encryption and revocation — is up to the customer.

“Google Cloud also provides tools that make it easy for customers to take their data with them if they choose to stop using Google Cloud services, without imposing a penalty or additional cost.”

CME’s existing data center in Aurora covers 428,000 square feet. Bischel had no information about the size or address of the adjacent co-location space but said it would be on the same campus as the current building.

In 2016, CME sold its data center to CyrusOne for $130 million but stayed there, leasing it in a 15-year deal.

“Our latest milestone with CME Group builds on our shared goal to accelerate CME's move to the cloud and innovate capital markets infrastructure worldwide," Thomas Kurian, CEO of Google Cloud, said in a news release.