NYSE Launches New Hybrid Trading System

CTO Rubinow also talks about Linux and planning for Euronext merger

The New York Stock Exchange launched its Hybrid Market trading system on Oct. 6. The long-awaited system enables members to buy and sell a limited number of stocks electronically and to continue trading with human auctioneers on the exchange floor. The new system includes 250 software releases, 60 upgraded systems and 1 million lines of code. Chief Technology Officer Steve Rubinow, who joined NYSE Group Inc. after it acquired the Archipelago Holdings Inc. electronic trading system earlier this year, talked about the state of the new system in interviews just before and just after the launch.

Chief Technology Officer Steve Rubinow

Chief Technology Officer Steve RubinowHow did the launch go? The Hybrid Market launch has been very successful. With trade execution times [for Hybrid Market] decreasing from an average of nine seconds to less than 0.3 seconds, our customers and the trading-floor community are using the system effectively throughout the day. We are looking to complete the rollout to all NYSE-listed securities in December 2006.

Will Hybrid help the NYSE avoid losing business to nimble electronic exchanges? We all know [that] for very good reasons, the NYSE needed enhancement, because speed historically wasn’t an emphasis. Now it is. A lot of the expertise from Archipelago, where there was a huge emphasis on speed, will be injected regularly here. We don’t want to have a situation where NYSE Group has both slow systems and fast systems. We want all of the systems to be as fast as the marketplace demands them to be.

How closely is Hybrid modeled on the Archipelago system you oversaw as CTO of that company? Archipelago was purely an electronic system. The attempt to achieve the proper blend of floor-based and electronic activity is unique. There is no technology that was used in Archipelago that is being used today in Hybrid. It all originates from NYSE before the merger. It is mostly HP systems, ranging from Tandems to smaller HP servers running both HP-UX and Linux, along with some IBM. We have grid technology that uses data that comes out of the NYSE systems that feeds other applications.

Did you add new technology for Hybrid? Wherever we needed more capacity, we added more servers, but we generally didn’t get rid of the older stuff.

What are the exchange’s plans for Linux? For every new application, we talk about the possibility of using it on Linux because of all the good things that Linux brings to the party. These are the systems that historically came from the NYSE side of the overall NYSE Group. NYSE Arca, which used to be Archipelago, uses a lot of Sun hardware, with both Solaris and Linux.

Are you working with Linux source code yet? We haven’t crossed that line yet and modified the source code for our own needs. We’ve thought about the advantages of doing it. But once you’ve done it, you’ve committed yourself to a support depth that you don’t have to do if you build right off the shelf with Red Hat Linux or Sun Solaris.

What redundancy and fail-safe mechanisms do you have in place? The same ones that the NYSE has always used. We have two data centers in the major metro area. We run pairs of mirrored redundant hardware hot in both data centers, as well as local redundancy in each data center.

Will the exchange ever move fully to electronic trading? That’s not what we are doing. It will be a mix of floor and electronic trading, and our customers will determine the percentage mix. Our goal is to offer systems that cater to the needs of our entire customer base. NYSE Arca is a purely electronic system that complements the hybrid model.

How will the pending merger of NYSE Group and the Euronext exchange affect IT operations? Since the end of summer, when everyone came back from vacation, we’ve gotten more diligent about getting down to details. The technologists from Euronext and those from NYSE are sitting down at regular meetings and taking inventory of what we have. We all know integration takes time. Things will run independently for a while. We have some financial targets to hit, which will drive some decisions. I like things simpler, with fewer moving parts.

Copyright © 2006 IDG Communications, Inc.

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