The London Stock Exchange (LSE) has recouped the £40m cost of its electronic trading platform in under 12 months, using the technology to drive up its trading volumes.
The Tradelect platform has helped the LSE increase electronic trading by 82% and to grow profits by 52% to £265.2m over the past 12 months, the LSE revealed when it announced its prelimary results on 22 May.
David Lester, CIO at the LSE, said the company plans to continue to invest in Tradelect, which was launched in June last year, to increase trading volumes further.
The exchange plans to quadruple the average number of messages its trading platform can process in the next six months. The number of messages processed by Tradelect will double to 10,000 in September when it completes the integration of Milan-based Borsa Italiana, which it acquired last year for £1.63bn. It plans to reduce the time taken to complete a trade from six milliseconds to three milliseconds by the end of October, doubling volumes again.
Lester said the LSE had reduced the cost of increasing Tradelect's capacity using off-the-shelf hardware from HP and Intel. "HP and Intel invest in new technology, which we can use to make us faster," he said. The exchange uses modular in-house middleware, which it can re-use and adapt to take in new business models.
It would be more challenging to do the upgrades if the software or hardware were proprietary, he said.
The number of trades an exchange can process has a direct impact on its attractiveness to investors. Higher trade volumes boost profits for the stock exchange and provide it with more market data to sell to investment companies - a major part of its income.