NYSE Euronext's single global e-trading platform

Just over a year after the third phase of NYSE’s Hybrid trading system went live, heralding the massive shift away from the floor and specialist trading, HP’s PR people contacted me this week with an announcement that the Hybrid system is running on HP Non-stop and blade servers. This isn’t particularly newsworthy in its own right, but it did get me thinking about the challenges that NYSE Euronext is facing within its US trading operations, and integrating its businesses and infrastructure on both sides of the Atlantic.

Reg NMS and the rise of other alternative trading venues have all driven NYSE’s market share in NYSE-listed trading down, even though market activity has seen its actual volumes increase. And it’s currently having to run two US electronic exchange infrastructures in NYSE Arca and the electronic component of its hybrid system. (Traders Magazine has a good article about the current state of NYSE's business here  )

When the NYSE Euronext merger was announced last year, NYSE claimed in a filing that it would save US$455 million over the three years it said it would take to complete the integration (of NYSE, Arca and Euronext) and achieve its goal of a single cash and derivatives trading platform operating across national borders and regulatory regimes.

Rubinow admits that the scale of such a project is ambitious. “But we don’t have a choice. If we don’t do it, the competition will.”

Originally the plan to integrate the three equities platforms (NYSE Arca and Hybrid, and Euronext’s NCS) and three derivatives platforms (Arca’s PCX Plus and OX, and Liffe Connect)  called for using Euronext’s JV with Atos Origin as the outsourcing partner. This made sense at the time as the JV owned the European trading platforms (with an eye to licensing them to third parties). But presumably now that NYSE Euronext has bought Atos out of the JV and taken platform ownership and key people back in-house, it will find it easier to manage the complexities involved in bringing it all together.

The joint venture also sold its trading technology to other exhcanges, and this is something that NYSE Euronext will now use to develop closer partnerships with smaller markets around the world as it looks after licensing this technology to others itself.

But focusing on its own system performance and creating the planned global platform will be the main priorities for the NYSE Euronext IT teams. Steve mentioned a couple of interesting areas where the exchange is working with the vendor community to boost the performance of its infrastructure:

In the area of high-speed server interconnects, the exchange is currently testing Infiniband technology and will have that in live production very soon.

They are also investigating taking segments of code and embedding them in silicon, in field programmable data arrays. Some subsystems and segments of code could be made significantly faster using this approach. The exchange is taking the lead from the market data vendors who have been working in this area, and looking at code within its own environment that is suitable for this.

As part of the integration project, it is engaged in a data centre consolidation programme that will take it from 6 to 2 in US, and 4 to 2 in Europe. As part of this, it has just begun work on a brand new greenfield data centre in the US after a lengthy search to find a suitable location with the right power capacity and diversity of power sources, sufficient network capacity, physical room to expand, security and proximity to customers in the north-east United States.