The London Stock Exchange’s new electronic trading system, TradElect, has gone live in the culmination of a huge four-year IT overhaul.
High-speed electronic trading is now crucial to the success of the exchange, as its annual results posted last month revealed. The LSE saw revenues leap 20% while operating profits shot up 55%, with particularly strong growth in trading on the exchange’s electronic order book, SETS, that pushed revenue in the broker services division up 31%.
The TradElect debut comes as the LSE seeks access to the prized MTS European electronic bond trading platform through its takeover of the Italian Borsa. The Milan-based exchange, which owns 49% of shares in MBE Holding, the joint venture company that owns 60.73% of MTS, has exercised its call option rights to purchase the 51% shares owned by NYSE Euronext.
The TradElect platform is aimed at producing a further increase in the speed of trading at the London exchange and boosting total system capacity. The platform has been undergoing testing with banks and City traders, and also had an early run-out at the Johannesburg Securities Exchange, which went live with the platform in April.
David Lester, the exchange’s chief information officer, said TradElect would deliver “a step change in trading capabilities” to the London market.
He added: “TradElect reflects the exchange’s strategic decision to replace its technology rather than take tactical steps to adapt the existing, outdated technology that most other market centres are using.
“Its launch underlines the exchange’s commitment to invest continuously to improve market efficiency for the benefit of all traders, investors and listed companies.”
TradElect gives the market the ability to execute trades fully and resiliently in around 10 milliseconds. This builds on the performance of Infolect, launched in October 2005, which provided a full depth view of company prices within 2 milliseconds.
The new platform also increases the LSE’s capacity – initially five-fold – to provide room for growth. TradElect will allow the exchange to double capacity on demand, at less than a fifth of previous costs.
Back-up provision for the new system includes dual processing at two sites. The LSE said it offered recovery from component failure within a second.
The TradElect launch follows last month’s move by the LSE to bring its IT service delivery team back in-house – another recognition of the core role that computer systems now play in its business.
The LSE is now reshaping its IT function, with up to 150 staff transferring back from contractor Accenture to operate and maintain the trading systems, including TradElect.
Read the latest London Stock Exchange stories