How offshored software development and Linux put the London Stock Exchange ahead of its rivals

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The London Stock Exchange offshored the development of its core trading system when it acquired Sri Lanka based MillenniumIT. It also dumped .Net and moved to Linux in the process.

It yesterday announced that its Turquoise trading platform, which was first to migrate to the new system, has reached a major goal. At 126 microseconds on average to complete a trade, the Turquoise platform is apparently the fastest in the world.

The London Stock Exchange' primary market will migrate to the Linux based system next month.

Fast trading speeds are business critical in today's trading sector so to outsource let alone offshore development of systems is a big step. But that is the interesting part. The London Stock Exchange wanted to keep control of development so it acquired the software company.

The Sri Lanka based development resource of about 200 people will ensure the core trading platform remains competitive.

Through MillenniumIT the London Stock Exchange gets a software development process it calls "BID" (Business Innovation-Dynamically).

BID splits the development into three parts. The technology development in the form of hardware and operating systems, the application layer such as trading platforms, ERP and clearing systems and business controls sit on top.

This means it is faster and costs less to roll out a new software set-up. Stock exchanges regularly have to tweak systems to meet regulatory and business changes.

 "It lowers the cost of development which means we can do more upgrade and introduce new products and services easier," says a London Stock Exchange spokesman. "With the previous system we only did a couple of upgrades a year but with the new system we can do more."

Rik Turner, analyst at Ovum, told me that having one of the fastest trading systems is vital to an exchange with ambitions to be a top five global player. "It's a calling card when you want to do deals," he said.

He added that MillenniumIT was always a niche developer and not just a low cost development company. "It has the best of both worlds a specialist trading software developer in a low cost country."

3 Comments

Outsourcing custom software development is not uncommon today. Large corporations and even small businesses prefer to work with outsourcing companies.
Thanks for your information.

Complex tasks like software development is ideally outsourced for companies that don't have in-house staff who can do the job. This way, companies don't have to invest in software development and still get its benefits.

Outsourcing custom software development is not uncommon today. Offshore software development is a big business today. Many developed countries like USA, Europe and Australia are highly dependent on the software and web technology. Large corporations and even small businesses prefer to work with outsourcing companies.

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This page contains a single entry by Karl Flinders published on October 21, 2010 6:00 AM.

Mahindra Satyam joins HCL on UK government contract trail was the previous entry in this blog.

Outsourcing suppliers give cause to believe the economy is getting back on track is the next entry in this blog.

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