Stock Exchanges Start Thinking in Microseconds

This version of the story originally appeared in Computerworld's print edition.

In the machine-vs.- machine world of financial trading, where IT is constantly trying to increase performance, transaction times are now being measured in increments of microseconds.

Over the past year, for example, the New York Stock Exchange and CME Group Inc., which operates the Chicago Mercantile Exchange and the Chicago Board of Trade, have begun to frame their thinking in units of microseconds as they look for ways to improve their transaction-processing throughput.

"It's all at the microsecond level right now," said Steve Rubinow, CIO at NYSE Euronext Inc., which operates the NYSE and the Amsterdam-based Euronext stock exchange.

Thanks to improvements in hardware, networking and trading algorithms, the time it takes exchanges like the NYSE and the CME to complete transactions is heading into the single-digit-millisecond range.

At such extreme speeds, microseconds matter -- a lot. A microsecond-level performance improvement, multiplied across systems that are processing millions of transactions per hour, can quickly add up to a competitive advantage.

"We got pulled into it," John Hart, CME's managing director of technology engineering, said of measuring in microseconds.

And as the performance-measurement levels get finer, the IT staffs at the exchanges are trying to eke out improved response times by upgrading interconnects, tweaking operating systems and testing new systems.

For instance, CME is already piloting the first blade server version of Hewlett-Packard Co.'s NonStop fault-tolerant systems technology. Hart said the blade, which HP announced in June, offers twice as much throughput as earlier NonStop models.

Rubinow recently met with a representative from a storage maker who told him a new system could deliver "submillisecond" response times. Rubinow asked, "Do you mean 900 microseconds or 100 microseconds? Because that's a world of difference to us."

The rep said he wasn't sure and hadn't been asked that question before. "Well, get used to it," Rubinow responded, "because everybody in this industry is going to ask that question."

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Copyright © 2008 IDG Communications, Inc.

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