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Report: Big Iron Still Rules Wall Street

Volume and speed require mainframes

Maria Trombly Today’s Top Stories

or Other Financial Stories

April 2, 2001 (Computerworld) -- Big iron isn't dead yet—at least not on Wall Street.

Indeed, mainframe computers will continue to perform key processing functions, such as clearing and settling trades for major stock exchanges and back-end trade processing organizations in the securities industry, for at least another decade, according to a new report released by Newton, Mass.-based Meridien Research Inc.

For mission-critical functions such as trade processing, there's still no substitute for the speed and capacity that mainframes can deliver, said Dana Stiffler, an analyst at Meridien Research and author of the report.

In fact, because of growing stock market volumes, many firms continue to add to their mainframe MIPS.

For instance, The Depository Trust & Clearing Corp. (DTCC), which provides the primary infrastructure for the clearing and settlement of the majority of the equity, corporate debt and bond transactions in the U.S., added a few machines last year and is planning to do so again this year, according to Steve Letzler, a spokesman for the New York-based company.

At the start of last year, the DTCC had enough computing power in its IBM G6 mainframes to handle up to 25 million transactions per day. By the end of the year, the company had added enough processors to handle 40 million transactions per day.

"By the end of 2001, we'll have that up to 60 million transactions a day" to handle growing volumes, with full redundancy, so we have duplicate sets," Letzler said.

In addition to the ability to produce higher volumes, the market is demanding faster execution.

Originally, the processing was performed in batches at the end of each trading day. During the past year, the DTCC moved to a multibatch processing format and expects to have a real-time process in place by the end of the year, Letzler explained. This transition is part of the securities industry's move from a three-day to a one-day trade settlement cycle, due to be completed in 2004 [News, Sept. 25].

The same demands are also being faced by the stock exchanges.

"We're always adding more mainframes for purposes of enhancing capacity," said Steve Randich, chief technology officer at Nasdaq Stock Market Inc. in Trumbull, Conn. Nasdaq uses mainframes from Blue Bell, Pa.-based Unisys Corp. for its quotation system, which puts the prices available out to the market. The stock exchange also uses a Compaq Computer Corp. Tandem S7400—the biggest Tandem machine available—for its order negotiation, execution and trade reporting systems, said Randich.

In fact, Nasdaq is reaching the limits of what these machines can handle, he said. "We're limited in our ability to continue to vertically expand our capacity," he said. "Therein lies the need to develop distributed architectures so we can more easily scale across multiple machines."

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