Dramatic cost savings through IT consolidation are at
the heart of the planned merger of two of the world’s largest stock
exchanges, but IT experts have raised doubts about the ambitious
integration timescales.
The “merger of equals” of the New York Stock Exchange and the
pan-European Euronext exchange will create the world’s largest
share trading market. At the heart of the business case for the
merger is a three-year plan to save £136m a year through IT
integration.
Euronext’s main technology supplier, Atos Euronext Market
Solutions, will be charged with delivering the systems integration,
but it faces a complex challenge as both stock exchanges are
engaged in major technology projects.
Dominique Raviart, senior analyst at Ovum, said, “Any large
merger is made harder when your IT is a work-in-progress. With
complexity comes difficulty and more risk. It is a difficult IT
integration to pull off in only three years.”
TowerGroup analyst Ralph Silva said the IT integration timetable
was extremely optimistic, particularly given the potential for
conflicting regulations and the need to reconcile different
business cultures. “Trading platforms are very complex. I would
have said five to seven years to rationalise platforms was more
realistic,” he said.
The New York Stock Exchange is currently integrating the
Windows-based platforms it acquired when it bought Archipelago
Holdings last year. It is also rolling out Hybrid Market, a system
that automates aspects of face-to-face dealings.
The exchange’s order management and messaging systems use IBM
Websphere and a DB2 database on an IBM mainframe running zOS.
Euronext.liffe, the derivatives arm of Euronext, is halfway
through a switch from 1,500 Sun Solaris servers to HP servers
running Linux and Intel. Elsewhere Euronext uses Windows servers
running Microsoft .net, having moved off an IBM mainframe
platform.
Under the merger plan, three cash trading systems used by the
exchanges will be replaced by a single global platform by 2009.
In the same period, three derivatives trading systems will be
migrated to a single platform. Ten datacentres will be reduced to
four, and four networks will be rolled into a single global
network.
John Oddie, global head of exchange business units at Atos
Euronext Market Solutions, said, “I do not see why we cannot do it
in three years.”
New York Stock Exchange chief executive John Thain expressed
confidence in the IT integration savings and timetable. “These
numbers have been very thoroughly scrubbed by our technology teams
over the past two weeks and we are very confident that we can
deliver,” he said.