The London Stock Exchange's decision to write its own flexible
trading software has enabled it to react to changes in the stock
trading sector and differentiate itself from increasing
competition.
The stock exchange launched
Tradelect, its core trading platform, a year ago this week (18
June 2007). It was part of a four-year, £40m project to replaced
the
Sets system developed using Cobol in 1995.
Tradelect reduced the time taken to complete a trade from 140
milliseconds to 10 milliseconds and was able to process 2,500
orders a second rather than 593 under Sets.
The London Stock Exchange identified the need for Tradelect to
be written in a modular way that could be rapidly updated as a
priority from the word go, said Robin Paine, chief technology
officer of the LSE.
Rewriting software to meet changing business needs is expensive
and time-consuming, unless it is written with change in mind, he
said.
Tradelect's modular design allows the stock exchange to add or
remove new business functions easily. It was developed using
Microsoft's .net Framework, which uses the C# programming
language.
"Investment in [Tradelect] puts us in a good position to be able
to compete both in terms of increasing the speed of trades as well
as launching new elements of functionality on Tradelect," said
Paine.
Tradelect's flexibility will be put to the test over the next
year. The company plans to
duplicate its entire technology platform to serve the Milan based
stock exchange Borsa Italian, which it bought last year for
£1.63bn. "We would not have been able to integrate Borsa Italiana
without Tradelect," he said.
The LSE has set up a laboratory in Reading with engineers from
Microsoft, Accenture, Corvil and Intel working on improving
performance. The exchange employs six in-house developers dedicated
to monitoring and improving Tradelect's performance.
It has become more important for the LSE to optimise its trading
platform this year following the introduction of European
legislation to liberalise the stock trading sector. The
Markets in Financial Instruments Directive (Mifid) has led to
new competition. New trading platforms, such as
Turquoise, set up by leading investment banks, are
emerging.
Bola Rotibi, principle analyst at Macehiter Ward Dutton, said
the exchange has demonstrated the benefits of forward thinking.
"If you write software with agility it is a recognition that you
want a change platform," she said. "You cannot introduce software
agility as an afterthought."
When the London Stock Exchange made its decision to develop its
own trading platform the stock trading sector looked very
different.
The last year has seen phenomenal change in the sector the
London Stock Exchange operates in but the company's modular
approach to software development has allowed it to keep pace.
Tradelect achievements
Daily electronic trading increased 82% in last financial
year
Profits grew 52% over past 12 months
Ninety-eight of the 100 busiest days ever since its launch
Nine out of 10 busiest days saw over one million trades made in
a day.
Record of 1.42 million trades in one day set on 22 January
2008
Timeline for Tradelect upgrades
18 June 2007: Tradelect launched, reducing the time taken to
process trades from 140 milliseconds to 10 milliseconds. Capacity
increased from 593 to 2,500 orders a second.
November 2007: Version 2 upgrade. Trading time reduced from 10
milliseconds to about 6 milliseconds. Capacity increased by 70%
from 2,500 to 4,200 orders a second. Introduced full suite of
Mifid-compliant services.
September 2008: Planned migration of Italian trades to Tradelect
platform.
September 2008: Tradelect Version 2 to launch. Plans to double
trading capacity to 10,000 continuous messages per second. Aims to
cut average time taken to complete a trade by half from 6
milliseconds to 3 milliseconds.