London Stock Exchange: The road to Linux

The London Stock Exchange’s move to Novell SUSE Linux based systems and a new matching engine written in C++ – set live on its main market on 14 February 2011 – was a major decision taken shortly after the appointment of a new chief executive two years ago. The systems replace a Microsoft .Net setup, with programs written in C# and running on Microsoft Windows Server and SQL Server.

February 2009

Xavier Rolet takes up the post of CEO in February 2009, following a spate of high profile outages on the LSE’s network, and as he begins the job he quickly states an intention to improve the exchange’s market position against specialist electronic rivals.

The appointment comes five months after an almost an almost eight hour outage on the LSE’s cash markets as a result of technical problems.

June 2009

Reports first emerge that the LSE plans to dump TradElect,its main technology platform that it had spent £40 million upgrading in 2007. The LSE had maintained that TradElect was not responsible for the September 2008 outage.

August 2009

The LSE starts testing alternatives to the TradElect platformin a bid to improve speed, and reduce costs. A month later, the open source community welcomes the news that LSE has chosen to replace TradElect with Linux-based trading platform Millennium IT.

The announcement sparks a war of words between open source pundits and proprietary systems makers such as Microsoft. IBM beats the drum about Linux, points out that LSE was the largest exchange to run Microsoft .NET proprietary systems while its German counterpart Deutsche Borse has moved to Linux environments with IBM messaging. Meanwhile Microsoft defends its position, and speaks out to detail its strengths as a supplier to exchanges with complex, high load environments.

January 2010

The LSE begins migrating its systems to the new Linux-based platform, which it describes as “one of the fastest, most reliable and technologically advanced markets in the world”.

July 2010

The LSE delays the migration by two months of its alternative trading venue, Turquoise, to Linux. The idea is to give clients and IT suppliers more time for development and testing.

News emerges that LSE chief technology officer Robin Paine has left the company. Paine had been instrumental in bringing in the Microsoft .Net-based TradElect platform. The reason for his departure is not confirmed.

October 2010

On Saturday 9 October, the LSE conducts its first live test of Millennium Exchange in the main trading environment. The LSE's clients, trading firms, use the "dress rehearsal" to get a feel for the new system and to test how effectively their trading technology interacts with the LSE’s.

The exchange claims that the new matching engine is the fastest trading technology in the world. The claims are largely accepted by trading technology experts, but observers warn that other exchange's systems - particularly those of NASDAQ in New York - are fast approaching the LSE's speed.

November 2010

The LSE decides to postpone the launch of Linux on its main cash markets. It is understood that trading firms said more time was needed for the overall infrastructure to be ready.

A major problem on the LSE’s Turquoise network, which already uses the new Millennium Exchange system, knocks out the platform for two hours. The LSE tells traders that a "suspicous" incident has occurred on its network. The Financial Services Authority and police are informed, and the exchange immediately delays the migration of its main cash market to the new system until early 2011.

February 2011

On 9 February, a week before it is due to set live the new matching engine on the main market, the LSE says it is in advanced talks to merge with TMX, the parent group of Toronto Stock Exchange. A merger would also lead to the two parties making a £40 million technology investment with the aim of standardising software.

On 14 February, following several weekends of trading simulation with customers, the London Stock Exchange switches on its new matching engine, which runs on the Novell SUSE Linux-based datacentres. The go-live is billed as one of the most significant steps in the exchange’s recent history, as it battles against the erosion of its market dominance by specialist rivals.

People involved with the migration state that the LSE’s choice of platform is closely related to its desire to offer fast messaging at high capacity to high frequency trading firms. The first day’s operation of the new system is largely seen as a success, with no reported high profile problems.

Copyright © 2011 IDG Communications, Inc.

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