New York Stock Exchange UK data centre concerns rife following fresh NASDAQ bid

Concerns are rife about the fate of a 315,000 square foot New York Stock Exchange data centre in Basildon, Essex, after NASDAQ launched a bid for the exchange that vowed to rationalise servers.

The Basildon data centre was recently built by NYSE Euronext at an estimated costs of hundreds of millions of pounds in order to serve European share traders, and employs technical staff with extensive Red Hat Enterprise Linux and trading technology expertise. Alongside a data centre in Mahwah, New Jersey, which serves US markets, NYSE spent around £300 million on infrastructure.

Deutsche Borse is proceeding with plans to merge with NYSE, after the New York bourse spurned an initial offer from NASDAQ. But NASDAQ has now raised its $11.3 billion (£7 billion) combined offer with Intercontinental Exchange to include further cash incentives should regulators block a deal. It also outlined more information on planned IT cost savings.

Bob Greifeld, NASDAQ chief executive, vowed to “rationalise” NYSE’s data centres, in an interview with the Financial Times, as part of efforts to deliver $740 million (£452 million) in cost savings.

When asked if NASDAQ would shut NYSE’s Basildon data centre in the event of a successful bid, Greifeld said a decision had not been made.

“We really need to get [due] diligence on that,” he said. The fate of NYSE’s New Jersey data centre and infrastructure in Paris, and NASDAQ’s own similar infrastructure in the US has not been made clear either.

The existing merger proposal from Deutsche Borse instead appears to support the Basildon and New Jersey data centres. However, exact integration plans have not been set.

As NASDAQ strengthened its bid, Greifeld told investors: “Our actions today demonstrate our commitment to pursuing this transaction and further illustrate exactly how our proposal is superior.”

NASDAQ has already promised to move to a single trading platform in the event of a merger with NYSE. That platform is likely to be based on Linux systems.

Its Genium INET platform, which would be the centre of a merged equities trading operation, runs on Linux in a reported C++ environment, and claims to deliver an average 97 microsecond latency.

However, this may not be an average that includes peak periods.

NYSE Euronext is currently moving all of its matching engine technology over to its own Linux-based setup, called the Universal Trading Platform, which runs on x86 servers. It also runs the Liffe Connect, which NASDAQ said would be replaced, as well as the Unix/Linux based Arca platforms, and its NSC platform operates in a Unix and Linux environment.

“Integrating all of the markets onto the NASDAQ INET trading technology platform, the leading  trading technology on the planet, will allow us to increase scale, decrease access and trading costs and bring new innovations to market faster,” NASDAQ said in its early proposal.

“As we did 40 years ago when we  invented electronic trading, NASDAQ OMX will continue to redefine the exchange landscape  through technology-driven innovation, creating a global destination to raise capital that will fuel job creation, growth and progress to build investor confidence.”

The original NASDAQ proposal heavily criticised the Deutsche Borse bid and claimed the German exchange did not have a good history of integrating technology.

A Deutsche Borse - NYSE merger would likely see a Red Hat Linux based platform emerge, as both of the exchanges run the system and have vowed to move to a common platform. Deutsche Borse’s main matching engine, Xetra, runs on Red Hat Enterprise Linux-based servers and uses the IBM WebSphere MQ Low Latency Messaging system.

Copyright © 2011 IDG Communications, Inc.

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