Cutler Group Activates Arca

San Francisco-based options trading firm Cutler Group is moving its quoting and auto-execution servers into a Weehawken, NJ facility to get low latency access to market data from the former Pacific Exchange following Archipelago's purchase by the New York Stock Exchange.

Craig Vie, director of IT at Cutler, says the firm has to move the servers that collect market data and run its implementation of Actant's Aqtor autoquote system, in order to avoid a 60-millisecond round trip from NYSE-Arca's data center in Weehawken to Cutler's servers in San Francisco then back to New Jersey.

"If we're competing with Bear Stearns and the hedge funds in New York or across the river in Jersey, if we have to wait for quotes to make it to San Francisco, then take them into our computers… we'd just get killed," Vie says.

Cutler had been using facilities owned by Mytech, a network and hosting services provider in San Francisco, for access to data from the PCX.

Now it will use a hosted ticker plant from Activ Financial in the Weehawken center to collect a direct feed of Arca data and interface with Cutler's applications.

"Cutler Group will be one of a number of users that will be… co-locating in the Arca facility in Weehawken, and we'll be helping those firms get connections to Arca and their apps for various offerings, such as black boxes, depending on the size of the firm," confirms David Bloomer, senior sales manager at Activ. "They will have their presence on the Pacific, some machines at the Arca center, and some connectivity back to us for access to products such as Activ Workstation."

Vie says Cutler wants to get latency down to less than 10 milliseconds.

The Weehawken facility is a data center run by Savvis, says Michael Cooleen, vice president and director of that vendor's financial services division. "We do have some West Coast firms setting up ticker plants in Weehawken… for lower latency," he says. "For them, it's nothing more than a cross-connect to their application, with no local loops. In that case… latency would be sub-five milliseconds because they are in our data center."

Vie says the firm is still working through some leasing issues with Arca, but it should be ready for a late July rollout. Although Cutler will not have staff onsite in Weehawken, Vie's staff will be able to change any settings using the Actant front end and monitor the servers using Citrix technology and a 10 megabit connection to San Francisco. He declines to comment on the cost of moving its Arca connectivity across the country.

Cutler has used Activ since the end of 2004 to collect direct feeds from the Chicago Board Options Exchange and Philadelphia Stock Exchange, as well as for Activ's consolidated datafeed. The firm also collects market data on the underlying equities from Nasdaq, Amex and NYSE in order to price options.

NYSE-Arca officials did not return calls for comment by press time.