The CME's iLink protocol is crucial for order entry and management in financial trading. Understanding the differences between iLink 2 and iLink 3 can help traders and financial professionals make informed decisions about their trading infrastructure.
Before we begin, it’s important to note that CME iLink 2 is set to be decommissioned from 31st December 2024, however, you may still find yourself curious in terms of what the difference actually is.
Overview of iLink
iLink is a point-to-point messaging protocol used by the CME to facilitate the electronic trading of futures and options. It ensures secure and efficient order routing, trade management, and data exchange between trading firms and the CME Globex platform.
Key differences between iLink 2 and iLink 3
Performance and latency
iLink 2: Offers robust performance but may experience higher latency compared to iLink 3 due to its older infrastructure.
iLink 3: Designed to reduce latency significantly, offering faster order entry and execution. It leverages more advanced technology to enhance speed and performance.
Access considerations
iLink 2: used for access to CME Convenience Gateway (CGW) sessions only.
iLink 3: used for access to the CME Market Segment Gateway (MSGW) and the Convenience Gateway (CGW) sessions.
iLink 3 to MSGW is the faster access method, although it is necessary to manage market segment connections for products on a given trading engine instance.
CGW access is bridged to MSGW and manages routing for all order entry messages to all market segments and routing is transparent.
Message handling
iLink 2: Uses an older message format and processing methodology, which may be less efficient in handling large volumes of data.
iLink 3: Introduces a more efficient message format and improved processing capabilities, allowing for better handling of high-frequency trading and large order volumes.
Security enhancements
iLink 2: Provides standard security features suitable for most trading operations.
iLink 3: Incorporates advanced security measures, including enhanced encryption and authentication protocols, ensuring higher security for sensitive trading data.
Scalability
iLink 2: May face limitations in scalability, particularly under high-load trading conditions.
iLink 3: Built with scalability in mind, it supports higher message throughput and can handle the demands of high-frequency trading environments more effectively.
Compliance and reporting
iLink 2: Meets the necessary compliance requirements but may lack some of the enhanced reporting features found in iLink 3.
iLink 3: Offers improved compliance and reporting capabilities, ensuring that traders can meet regulatory requirements more efficiently and with greater accuracy.
Backward compatibility
iLink 2: Compatible with older trading systems and infrastructures, making it easier for firms to maintain their existing setups.
iLink 3: While it offers advanced features, it may require updates to existing systems to fully leverage its capabilities. However, it is designed to integrate smoothly with modern trading platforms.
Choosing the right protocol
Deciding between iLink 2 and iLink 3 depends on your trading needs. If you require lower latency, higher security, and better scalability, iLink 3 is the superior choice. However, for firms with existing infrastructure based on iLink 2, the older protocol still provides reliable performance and compatibility. However, bear in mind that you’ll need to consider a migration soon.
