The London Stock Exchange's Linux-based trading system is at the forefront of a proposed merger between the venue and Toronto Stock Exchange parent TMX, announced late last night.
The LSE immediately put its money where its mouth is, proposing £40 million of technology investment to put the two companies onto a common technology setup, led from London. Exact details of technology plans are expected to be announced shortly.
TMX Group, which comprises the Toronto and Montreal Stock Exchanges, is based on HP ProLiant servers, running Red Hat Linux and Unix. Over the last three years it has been implementing this new setup, which it has called the Quantum platform, promising it will deliver much lower latency and capacity.
The TMX latency and capacity claims mirror those made by the LSE, which delayed an ongoing Linux-based rollout on its main venue as it tackled security and capacity concerns.
The LSE matching engine, called Millennium Exchange, is based on SUSE Linux from Novell and runs in a C++ environment, after the venue abandoned a Microsoft .Net setup. It is already live on the LSE's dark pool or anonymous trading venue, Turquoise, and is due to go live on the main exchange on Monday following live testing last weekend.
The combined group would also use TMX's SOLA derivatives platform, developed in C++and supporting Linux and Unix, as well as Windows platforms.
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The LSE said it was in "advanced" talks with TMX for the merger, which would create a company with headquarters in London and Toronto. It would be the largest exchange for mining companies and European government bonds, and would have a combined value of nearly £6 billion.
With technology at the forefront of a merger, the LSE insisted that new management would be taken from "a balance of leaders from both organisations". But Xavier Rolet, the LSE chief executive who has been instrumental in the exchange's Linux drive, would lead the new company, and its technology centre would be in London.
The combined company "will operate on common technology platforms with the aim to further facilitate efficient access" across the markets, the LSE said in a statement. "Together with the expected increase in liquidity, improvements in technology are expected to enhance certainty of execution, lower trading costs and reduce spreads and cost of capital."
Within two years, the LSE expects to cut £35 million from costs across the combined group. By 2017, it expects to have gained £100 million in additional revenues as it cross sells data services and other offerings.
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