The system reduces average trading times by 93% to 10 milliseconds and boosts capacity to 3,000 trades per second - five times the capacity of the previous system.
Robin Paine, chief technology officer at the London Stock Exchange, said these levels of performance made the exchange the fastest in Europe, and probably the world.
"This year we are predicting trade volumes to increase by more than 60%, and the current level of capacity is enough to trade all European equity," he said.
Bob McDowall, senior analyst at TowerGroup, said Tradelect had arrived at the right time to compete with alternative trading platforms being developed, such as Project Turquoise, which is backed by a consortium of investment banks.
"The quicker you can obtain information and react, the more competitive you become," he said.
The project had four phases: selecting and testing technology on internal systems, integrating a system to generate real-time price comparisons from the stock exchange, implementing a real-time surveillance system to monitor intra-day price movements, and the introduction of Tradelect.
Development costs were kept down through the reuse of code in core systems, said Paine. "One of the core principles at the start of the project was software agility. At its heart Tradelect has a complex piece of [proprietary] middleware called Ibus, and through this we reuse 90% of the code," he said.
Tradelect was developed using Microsoft's .net framework. It replaces the Sets electronic order book trading service, which was developed using Cobol in 1995. The cost of increasing the capacity of Tradelect would be 20% of the cost of creating a similar increase on Sets, said Paine.
Bola Rotibi, senior analyst at Ovum, said software agility was a major objective for IT directors, and the London Stock Exchange had taken a pioneering step.
"They did not state particular software, but they did say they wanted software agility, which is a much more high-level decision," she said.
LSE outlines MiFID support >>First live tests of Tradelect a success >>
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