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 delivering 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 successful messaging at the higher speeds. The system runs in a C++ environment.
The previous technology, called TradElect, was developed by Accenture in a Microsoft .Net environment. 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 LSE’s specialist electronic rivals, such as Chi-X.
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.
Novell, which is providing essential support to the new matching engine by running the LSE’s core datacentre software, said SUSE Linux would provide the Exchange with a “high performance, secure, green and interoperable platform, capable of making intelligent use of virtual and physical environments”.
“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,” said Sean McCarry, UK manager at Novell.
But as the LSE’s competitors continue to erode its market dominance, it is also increasingly forced to take other 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.