The London Stock Exchange is testing alternatives to its troubled £40 million TradElect electronic trading platform.
The move is an attempt to improve speed, and reportedly to reduce costs. But the TradElect platform has also suffered serious reliability issues, when last year network software problems took it offline for a potentially devastating seven hours. At the time, angry traders stormed out of the exchange in protest.
TradElect, developed and maintained by Accenture, was upgraded only a year ago under the leadership of former chief executive Clara Furse. It runs on HP ProLiant Servers and Microsoft .Net and SQL Server 2000 systems, within a Cisco network architecture.
The LSE is now “reasonably close” to selecting alternative technology, according to Xavier Rolet, chief executive since May, speaking in the Wall Street Journal.
“In the past couple of months, we've reviewed technology solutions around the world and done testing,” he said this week.
Having a faster platform could help the LSE to keep pace with specialist electronic trading rivals such as Chi-X, it was reported.
“We want to go a lot faster. We have 2.7 milliseconds at the moment...The goal is to increase speed to sub-millisecond for sure, and have the ability to go even below that afterwards," Rolet said.
But this speed could still be slower than Ch-X, which has an average trade messaging time of 0.4 milliseconds, the WSJ stated. The demand for speed has become heightened in recent years alongside the growth in algorithmic trading, where machines scan for market changes and make large numbers of rapid trades based on mathematical formulae.
In June, the Financial Times also suggested there was a strained relationship between the LSE and external IT suppliers, blaming the exhange for “relying” on consultants to build and maintain its systems over the years. It is not known whether a choice of a more off-the-shelf platform is intended to address such concerns.
Cost is understood to be an additional factor motivating the change, with nearly half of the LSE’s current annual expenditure dedicated to technology.
But Rolet declined to comment on how much money the LSE plans to spend. Optimising platforms was a “continual process”, he said.
The company was said to have cut 120 roles in early July, but a spokesperson today declined to comment.