London Stock Exchange smashes world record trade speed with Linux

The London Stock Exchange has said its new Linux-based system is delivering world record networking speed, with 126 microsecond trading times.

The news comes ahead a major Linux-based switchover in twelve days, during which the open source system will replace Microsoft .Net technology on the group’s main stock exchange. The LSE had long been criticised on speed and reliability, grappling with trading speeds of several hundred microseconds.

The record breaking times were measured on the LSE’s Turquoise smaller dark pool trading venue, where trades are conducted anonymously. That network switched over to Linux from Cinnober technology two weeks ago. Speed is crucial as more firms trade automatically at lightning speed, using advanced algorithms.

The 126 microsecond speed is “twice as fast” as its main international competitors, the London Stock Exchange said. BATS Europe and Chi-X, two dedicated electronic rivals to the LSE, are reported to have an average latency of 250 and 175 microseconds respectively. Netiher company immediately provided details. But many of the LSE’s older and more traditional rivals offer speeds of around 300 to 400 microseconds. Nevertheless, Linux is now standard in many exchanges.

Millennium Exchange is set to go live on the LSE’s main exchange in 12 days’ time, on 1 November. The LSE has already conducted one live ‘dress rehearsal’ last weekend, and announced it would hold a second dress rehearsal this weekend and one the Saturday after, two days before the go-live.

The third dress rehearsal was pegged in after some of the LSE’s customers, which number 300 trading firms in total, this week requested more time to test their systems live on the new Linux network. While it is understood the LSE’s technology ran largely successfully on the first test, the migration is complex for customers and may be presenting some challenges.

If the third test is successful, the LSE will open on Linux on 1 November, otherwise it will postpone the launch for a fortnight.

David Lester, CEO of Turquoise, said that alongside the 126 microsecond average latency, 99 percent of orders would be processed within 210 microseconds, and only 0.1 percent will take longer than 400 microseconds.

He said the the speed demonstrates the LSE has “made it clear we intend to compete, and compete strongly”.

Update: LSE delays Linux launch after live test

Now read:London Stock Exchange Linux record breaking system faces new high-speed challenge

Copyright © 2010 IDG Communications, Inc.

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