The agenda behind the move is for NYSE Group to broadly be in the technology business, says Sam Johnson, NYSE Euronext EVP and CEO of NYSE TransactTools. “Besides providing the liquidity, which is the traditional business of the exchange, it will provide the technology infrastructure for their customers to access liquidity,” he says.

Thinking of the combined offering as a technology stack, Johnson says at the lowest level is the network services layer which is SFTI, then the network services layer which is Sector and then Transact Tools’ TCM (Trading Connectivity Management) which is purely software for messaging and connectivity. “This would line up to the current exchange business of aggregating and offering liquidity for market participants,” Johnson says. “Now you have this secondary infrastructure of providing infrastructure to access liquidity, which all came together as a single entity with its own brand last week,” he says.

While NYSE TransactTools is wholly owned by NYSE Euronext, “We continue to operate as an independent connectivity provider to the broader market,” explains Johnson. “We’re selling solutions to customers who have no affiliation to the NYSE Euronext markets. So while the technology arm provides connectivity to the NYSE and NYSE Arca, it can also be a backbone to support any of the NMS markets and also provide other services on that backbone such as reporting and trade analysis, measuring latency and measuring execution quality.

NYSE TransactTools will build upon the SFTI network backbone, which connects all Reg NMS equities and options markets in the U.S. and is also a carrier of market data in various formats. The SFTI network was built in 2002 after 9-11 to be impervious to terrorist attacks or disasters. Going forward, the goal is to expand the network into Europe and Asia to become a single global backbone for secure and reliable connectivity to all securities markets. “The idea is that a participant plugs into the backbone and gets access to all the products he wants to trade and all the markets he wants to trade,” says Johnson.

Given the NYSE’s own diversification into bonds and derivatives and non-equity markets, NYSE TransactTools will be a multi-asset platform that links to non-equity markets as well as equity markets, says Johnson.

One of the challenges and huge opportunities over the next couple of years will be making this into a truly global platform, he says. Given that the NYSE has just merged with Euronext, one priority is to provide access to the Euronext markets on the continent. In parallel, NYSE TransactTools is working on linking to some Asian exchanges, noting that the NYSE has formed an alliance with the Tokyo Stock Exchange and made an investment in India’s National Stock Exchange. “Clearly our markets are a priority and we’ve got to get them linked,” he says. In addition, it’s working on connecting to other exchanges that are not part of Euronext, such as the Swiss Exchange in Zurich, which is a client, he notes.

Part of the NYSE Euronext’s alliance with the Tokyo Stock Exchange relates to technology strategy. “We’re having frequent dialogues with the Tokyo exchange about the next generation trading architecture and how we can be helpful is on the networking and connectivity side there,” says Johnson. He expects to have connectivity to the TSE this year.

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