London Stock Exchange SUSE Linux choice based on HFT capacity

The London Stock Exchange’s new matching engine, which went live at 8am today, has been based on Novell SUSE Linux in order to satisfy vast messaging capacity requirements, according to the supplier.

As high frequency trading increasingly dominates share sales, the London Stock Exchange sought a stable system for its data centres that will handle tens of thousands of network messages a second, while delivering round-trip trades at what it has called “record speeds”.

Even though the system was executing 126 microsecond end-to-end average latency on the LSE’s alternative market, Turquoise, LSE traders had expressed concerns that it would continue to deliver fully stable messaging at the vast capacity on the main venue.

The previous technology on the LSE main market, called TradElect, was developed by Accenture, written in C# in a Microsoft .Net environment, running on Windows Server and SQL Server. Until the switchover, the LSE continued to spend heavily to make TradElect deliver trading at under two milliseconds, nearly 15 times slower than the new setup. It was also around four times slower than the exchange’s specialist electronic rivals, such as Chi-X.

The new system was developed in the C++ programming language. It is understood that the LSE’s decision to take system development in-house was based on a desire to maintain full control of work. As the LSE changed its core systems, it was presented with an opportunity to take over development.

The core matching engine, Millennium Exchange, was originally developed in Sri Lanka by exchange software specialist Millennium IT, which the LSE acquired in 2009 for £18 million. The system code continues to be maintained and developed by exchange staff in London and Colombo.

Sean McCarry, UK manager at Novell, which is providing essential support to the new matching engine by running the LSE’s core datacentre software, said: “The LSE is the most prestigious and most recognised exchange in the world so we are proud to be the technology partner of choice for this important deployment.”

Antoine Shagoury, chief information officer at the London Stock Exchange, said the new system would provide “exceptional levels of performance, functionality, and capacity”. The rollout was a “key milestone” in the introduction of “tightly integrated transaction technology” across the LSE, he said.

But as the LSE’s competitors continue to erode its market dominance, it is also being increasingly forced to take other strategic steps. Last week, it said it was involved in “advanced” merger discussions with Toronto Stock Exchange parent TMX, in a move that could see it standardise on a SUSE Linux backbone with the Millennium Exchange matching engine.

In depth London Stock Exchange: The road to Linux

Copyright © 2011 IDG Communications, Inc.

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