By Mike Harvey, Times Online
25 June 2009
The New York Stock Exchange has signed a deal with Juniper Networks aimed at making it the fastest trading system in the world.
The companies said a new core computer network would support several billion daily transactions and quotes across various asset classes, with extremely low latency, or fewer delays in data transmission.
NYSE Euronext, which processes as many as 300,000 transactions per second, claims now to be as fast as any exchange in the world and said the improvements would make it the fastest.
NYSE would implement the new network next year, making it “the premier place for conducting trading on the planet”, according to Steve Rubinow, chief information officer of NYSE Euronext. “No one else that we know of is doing anything like this,” he said.
In trading exchanges, latency, the time taken for a trader to make a bid and it being verified, is measured in milliseconds, or thousandths of a second. Delays can cost traders millions of dollars. Studies have shown that a latency of tens of milliseconds in the networks could result in a 10 per cent loss in revenues for a trading firm.
Juniper, which makes most of its revenue from selling high-performance computer routers and switches to direct data traffic, said it would help design a more advanced network for the exchange’s new data centres in New York and London. NYSE Euronext is in the middle of consolidating its data centres from 10 to four, which will also improve the speed of transactions.
Mr Rubinow said: “Juniper has developed truly unique and innovative technologies that help us to deploy a very high capacity, low latency network that meets the stringent demands of the new data centres.
“With Juniper, we are able to dramatically cut the cost and complexity of managing our data centre network today, while continuing to enhance our competitive position.”
Juniper said its new switches and systems would reduce the time taken for a single communication between computers within a data centre by two thirds to about 50 microseconds. Each transaction can involve dozens of such internal communications between computers before it is confirmed. Improving internal latency was crucial to speeding up the overall transaction time, Juniper said.
Pradeep Sindhu, chief technology officer of Juniper, said trading exchanges were involved in “an arms race” to become the fastest.
The London Stock Exchange has said it is continuing to update its trading systems. Last month the LSE said it was going to upgrade its TradElect electronic trading platform. Recent updates have improved capacity to 18,000 messages per second this year, resulting in average end-to-end transaction times of 3.7 milliseconds. Xavier Rolet, the chief executive of the LSE, announced a review of the group’s technology infrastructure, including the possibility of replacing its cash equities trading platform.