London Stock Exchange completes first live Linux test

Millennium Exchange platform will deliver 0.125 millisecond trading speed, LSE says

October 13: The London Stock Exchange has completed the first “dress rehearsal”, a test with its customers online, of a new Linux-based system due to replace Microsoft-centric architecture.

The Millennium Exchange system, based around Linux and Sun Solaris Unix, and using Oracle databases, will replace the Microsoft. Net-basedTradElect platform on the main stock exchange on 1 November, and is intended to be one of the fastest exchange systems in the world with trading times of 0.125 milliseconds. The exchange completed the switchover of its separate dark pool, or anonymous, trading platform Turquoise from different systems earlier this month.

The LSE declined to disclose its verdict of the Millennium Exchange dress rehearsal, which took place on Saturday after months of extensive offline tests. But sources close to the exchange indicated it had gone successfully.

Another full rehearsal will take place on 23 October, just over a week before the go-live date. The exchange is pressing ahead with the start date of 1 November, but if customers — the trading firms — are not ready or any major technical difficulties are experienced, a contingency go-live date of 15 November has been set.

Until then, the exchange will continue to work with the outgoing TradElect system, based on Microsoft .Net architecture and updated by Accenture in 2008 for £40 million. In July, it booked £25.3 million depreciation costs on TradElect.

TradElect, the subject of much controversy in recent years, had suffered a series of high-profile outages, the worst being an eight hour downtime in 2008. At the time the LSE maintained that TradElect was not responsible for the outage, but has since, nevertheless, made aggressive steps to replace the platform by acquiring trading firm MillenniumIT, the supplier of its new system.

Networking speeds are also a core reason behind the move. The LSE has been working hard to pull trading times on TradElect to below two milliseconds, a sluggish speed compared to rivals such as Chi-X, which claim times of under 0.4 milliseconds.

The LSE claims its new trading platform will deliver times of 0.125 milliseconds, which could make it one of the fastest exchanges in the world. The change is particularly important given the growth of algorithmic trading, where computers automatically place millions of buy and sell orders as stock prices change.

In an interview this week in the Financial Times, London Stock Exchange chief executive Xavier Rolet said the exchange had “already mapped out” the next generation of technology improvements to keep the Millennium platform at the forefront on speed.