CME Group sharpens analytics for strategic insight, growth, and risk

Boosting performance and scale of analytics applications with IBM

Published on 27-Nov-2013

"IBM Platform Symphony has gone way above and beyond our expectations around performance. We are now able to analyze 700 times more portfolios in minutes rather than hours." - Lance Klein, Senior Director of Enterprise Architecture, CME Group

Customer:
CME Group

Industry:
Financial Markets

Deployment country:
United States

Solution:
Grid Computing, Technical Computing, Big Data, Big Data & Analytics: Improve IT, Enabling Business Flexibility, Workload Management

Overview

CME Group is the operator of the world’s leading and most diverse derivatives marketplace, trading 12 million contracts daily and managing nearly $100 billion in collateral. The company owns and operates futures and options exchanges in Chicago and New York City, as well as an online trading platform. It also operates CME Clearing, one of the world’s leading central counterparty clearing providers (CCPs), which acts as the guarantor of every transaction that takes place in CME Group markets, as well as CME Clearing Europe, the company’s London-based clearing house.

Business need:
CME Group processes more than a quadrillion of dollars in trades for thousands of firms. New industry regulations and reforms meant that all derivatives exchanges clearing swaps – including those at CME Group – needed to provide more detailed and sophisticated intraday risk analytics—and had just months to create a faster, more agile and scalable solution to handle the far larger workload.

Solution:
CME Group deployed industry-leading IBM® Platform™ Symphony high-performance grid management software—creating a shared, flexible infrastructure for both compute- and data-intensive analytics applications, including its Standard Portfolio Analysis of Risk (SPAN) system.

Benefits:
Enables CME Group to analyze 700 times more portfolios in its SPAN system in minutes rather than hours. Sharpens the firm’s agility to respond quickly to changing market conditions and client demands. Delivers impressive scalability, helping CME Group to keep pace with the dynamic nature of its global business.

Case Study

CME Group is the operator of the world’s leading and most diverse derivatives marketplace, trading 12 million contracts daily and managing nearly $100 billion in collateral. The company owns and operates futures and options exchanges in Chicago and New York City, as well as an online trading platform. It also operates CME Clearing, one of the world’s leading central counterparty clearing providers (CCPs), which acts as the guarantor of every transaction that takes place in CME Group markets, as well as CME Clearing Europe, the company’s London-based clearing house.

Staying on top of changing requirements
Faced with ever-changing market conditions and industry regulations, CME Group must work constantly to refine and expand its array of products, services and technologies to support growing numbers of clients with access to more liquidity, lower transactions costs, effective risk management and better predictive analytics.

As CME Group is a global organization, the firm is subject to the laws and regulations in the locations in which it does business. One of the key regulations is the Dodd-Frank Act (Dodd-Frank), a comprehensive reform package that includes significant changes to the oversight of over the counter derivatives markets. In accordance with new regulations, derivatives exchanges clearing swaps – including CME Group-operated exchanges—need to report significantly more detailed risk analytics from their key applications for futures transactions.

One such application is the company’s Standard Portfolio Analysis of Risk (SPAN) system—a sophisticated analytics solution that calculates performance bond requirements by analyzing the "what-ifs" of virtually any market scenario. Since its introduction in 1988, SPAN has become the industry standard for portfolio risk assessment, used globally by more than 50 exchanges and trading firms. With the introduction of Dodd-Frank, instead of analyzing the margin requirements for about 300 trading firm portfolios, SPAN now needed to analyze over 200,000 portfolios.

Lance Klein, Senior Director of Enterprise Architecture at CME Group, explains: “SPAN calculations form a crucial part of our daily processing for futures transactions—we calculate margin requirements for all our customer portfolios several times a day. Use of this system has really taken off in recent years and the number of portfolios that we manage with SPAN has grown from hundreds to hundreds of thousands.”

CME Group needed its infrastructure to scale and to deliver maximum performance in order to meet Dodd-Frank and CFTC rules. Just as importantly, the firm needed an enterprise solution that could handle current and future analytical workloads driven by other applications, lines of business (LoB), and compliance regimes. The firm did not want to significantly add to the size and complexity of its IT infrastructure; to achieve this, it needed maximum performance from and utilization of its existing enterprise IT systems.

Flexible, scalable IBM solution
With these objectives in mind, CME Group turned to the IBM Platform Symphony high-performance grid management software to create one high-performance, shared heterogeneous infrastructure. IBM Platform Symphony manages and accelerates both compute- and data-intensive workloads, allowing the company to run multiple parallel workloads and share resources fluidly.

The solution also delivers impressive scalability, giving CME Group the ability to automatically manage and dynamically allocate IT resources to the highest-priority workloads. This capability enables the company to react more flexibly to the changing demands of its global business, flexing computing power and capacity quickly as requirements dictate.

Higher performance, faster results
By ensuring high utilization of existing computing resources, the solution enables CME Clearing to rapidly process the higher volumes of analytical queries in its SPAN system.

Steve Goldman, Executive Director of Technology Planning and Acquisition at CME Group, notes: “IBM Platform Symphony has gone way above and beyond our expectations around performance. We are now able to analyze 700 times more portfolios in minutes rather than hours. During testing, we selected a number of calculations that we predicted would take anywhere between an hour-and-a-half and two hours to complete. We ran the first test and had the results within a matter of minutes.”

These performance improvements help to provide CME Group with a new level of agility that is a critically important competitive differentiator in the fast-paced financial industry. By speeding time-to-insight for business critical analytics, the company will be better equipped to meet ever-changing market conditions and customer demands.

Klein remarks: “We are always looking for ways to improve the quality of the products and services we offer, and help our clients to make the best investments. IBM Platform Symphony allows us to do just this by giving us the means to run deeper and more complex algorithms for risk. By accelerating and expanding what were traditionally resource-intensive and time-consuming analytics processes, we can gain much faster insight into a much broader range of scenarios.

“For example, we can find the answers to questions such as, ‘If the market moved like it did a year or two ago, what would happen to a certain portfolio and how much money would a client potentially lose?’ This gives us a deeper understanding of risk in a particular portfolio, helping to make more accurate forecasts for our clients.”

He concludes: “IBM Platform Computing software has really been an enabler technology for us. With IBM Platform Symphony, we can serve more customers while maintaining an exceptionally high quality of service—it is this kind of agility that helps us guarantee better business results and build our competitive advantage.”

For more information
Contact your IBM sales representative or IBM Business Partner, or visit us at: Platform Computing ibm.com/platformcomputing and Technical Computing ibm.com/technicalcomputing

Products and services used

IBM products and services that were used in this case study.

Software:
Platform Symphony

Legal Information

© Copyright IBM Corporation 2013. IBM Corporation. Systems and Technology Group. Route 100. Somers, NY 10589. Produced in the United States of America. October 2013. IBM, the IBM logo, ibm.com, and Platform are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml This document is current as of the initial date of publication and may be changed by IBM at any time. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. The client is responsible for ensuring compliance with laws and regulations applicable to it. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the client is in compliance with any law or regulation. Statements regarding IBM’s future direction and intent are subject to change or withdrawal without notice, and represent goals and objectives only.