Euronext nears debut of Red Hat-based global trading platform

By Pam Derringer,
09 December 2008

Despite the recent turmoil in the financial markets, the New York Stock Exchange (NYSE) is on track to roll out its Universal Trading Platform in Europe late this year. The platform will create a single market exchange for equities, cash, derivatives and other commodities for the U.S., Europe and, potentially, other regions..

Steve Rubinow, the CIO of NYSE Euronext, the combined U.S./European market, confirmed that in the coming weeks the Red Hat-based platform will go live in Europe and expand globally in 2009. In addition to NYSE, the platform will serve Euronext, Europe’s largest cash equities market; Liffe Commodities, a European derivatives market, and NYSE’s Arca Options, a U.S. options electronic exchange. The precise date of the European launch has not been set.

Although the recent market plunge slashed typical stock portfolios by a third or more and created havoc in worldwide markets, Rubinow said that prior to the economic recession, the NYSE’s near-ready global trading platform and other data center projects were “on track,” fiscally speaking, and remain so. Ditto for IT’s pledged cost reductions.

“In terms of recent events, unlike the banks and investment houses that have taken positions, as long as [the financial institutions] are trading vigorously, that’s good for us,” Rubinow said. “We’re the middleman. We’re doing well.”

Flexibility, performance are key
NYSE’s new platform is architected for maximum flexibility. It can handle all existing types of fiscal assets — and even those that have yet to be imagined — in order to extend NYSE’s product line as well as its geographic footprint, Rubinow said. With its flexible interfaces, the software itself can be customized for use by other capital markets to become, in turn, another NYSE product, he said.

To minimize cost, the new platform will run primarily on Red Hat Enterprise Linux (RHEL) 5on commodity hardware. (Several years ago NYSE adopted RHEL to maximize hardware/software flexibility.) The platform is a mix of in-house software, incorporating and enhancing electronic trading technology and market aggregation software from Archipelago and Wombat, respectively, which are both recent NYSE acquisitions, Rubinow said. To minimize risk, the first round of platform innovations is limited to the customer-facing front end as well as incoming and outgoing market data. After NYSE has ensured that everything works perfectly, back-end functions that affect orders and reports will be converted, he said.

Although he declined to offer specifics, Rubinow said he is “very happy” with the performance of the new platform, where speed is a particularly critical benchmark. The multinational NYSE Technologies project team encountered only a few surprises and no major obstacles and is nearly on schedule, which is a testament to the caliber of the few dozen participants, he said.

For the European market, platform performance is critical because recently it has become increasingly interconnected with global markets, with a corresponding increase in competitiveness, forcing markets there to compete aggressively on functionality, price, speed and flexibility or risk getting overtaken by smaller, more nimble rivals, Rubinow said. The customer overlap between the two exchanges (NYSE and Euronext) also has raised service expectations of Euronext’s clientele, he said.

Other data center initiatives
Concurrent with the construction of the universal trading platform, NYSE plans to build its own private cloud, which must feature high performance and tight security given the exchange’s high profile as the symbol of capitalism, he said. A private cloud would augment NYSE’s ability to juggle multiple countries, currencies and commodities in a seamless transparent manner, he said.

And to save money and accommodate organic growth and colocation requests from customers, NYSE has major data center consolidation projects on both continents under way, Rubinow said.

Last year’s merger left the two exchanges with six data centers in the U.S. and four in Europe, which will be reduced to two on each continent. Of the four, one new facility will be built in the northeastern U.S., and one European data center will undergo a major retrofit, he said. A centralized, service-oriented compute, storage and networking delivery model is also under study, he said.

As for the future, Rubinow said the market’s recent massive declines have demonstrated the fallibility of predictive market models, but he expressed hope that next year’s swings will not be as dramatic.

“We think the volumes won’t be as volatile next year,” but a handful of large transactions still can create large gyrations, he said.