29 June 2006
NYSE chief technology officer Steve Rubinow explained to SIA delegates the need to properly integrate some of the exchange’s systems, following the ARCA merger and the proposed merger with Euronext
Following the merger of NYSE and ARCA last year and the recently announced decision to create the first transatlantic stock market by merging with the pan-European Euronext exchange, NYSE has indicated that it will soon be consolidating and integrating some of the underlying technology in order to better align the exchange’s systems.
NYSE chief technology officer Steve Rubinow told SIA delegates that the exchange has decided to integrate the technology “where it makes sense to do so”, for example, the consolidation of FIX gateways and customer gateways. “We will check where there is duplication and judge which to keep on the basis of performance,” Rubinow explained.
However, Rubinow was a little more cautious regarding consolidation with Euronext and said that they will “listen to what their customers want” before taking any decisions. “If two platforms make sense, then we will do that. Even if we have multiple platforms but underlying integration, wherever we can find a space to consolidate, we will do it,” he said.
NYSE is therefore attempting to minimise its silos and allow for future “flexibility”. Rubinow hinted at further acquisitions as a reason for this requirement for adaptable systems: “The only thing that we know is that consolidation is likely to happen and we will not be in good shape if we do not allow for the flexibility to accommodate this.”
These plans for consolidation will obviously spell bad news for vendors that currently partner with the exchanges. Rubinow discussed how the integration project will inevitably involve a rationalisation process with regards to the number of vendors that they currently work with. “We need to look at the bigger picture and decide which vendors are performing the best and then choose one or two vendors for each area,” he said.
Rubinow also stressed the need to tackle what he dubbed as “the rise of the machines”: the growth in algorithmic trading. He suggested that exchange infrastructures need to be robust enough to support the rise in trade volume and adapted as required, whilst the focus must also remain on driving down latency, downtime and costs for clients. This may entail a rip and replace solution in the future if the exchange grows any larger and becomes too complex. “To fix all the problems could take years, but to rebuild from scratch would take a matter of months,” he explained.