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Euronext.liffe Shifts Exchange to Linux-Intel Platform

The European derivatives exchange is replacing Sun Microsystems' Solaris operating system and hardware with a Linux-Intel platform.

Euronext.liffe is switching its technology to the Linux operating system and the Intel-based processor citing the need to keep up with the growth of algorithmic trading.

The move signals "a fairly substantial shift in the electronic exchange's IT strategy," says Jim Johanek, SVP U.S. Technology Strategy for Euronext.liffe. The futures exchange—which is the derivatives arm of Euronext Group—initiated the process in 2004 right around the time when algorithmic trading in the futures industry began to take off, says Johanek.

Euronext.liffe is moving off the SunFire 15K, a large mainframe box, that runs the Solaris OS and chosen Hewlett Packard (HP) to supply the high-end compute intensive servers and Red Hat, the distributor of Linux. In addition, it has secured full support agreements with both HP and Red Hat. The exchange has been running on Sun since 1998, when Liffe (the London International Financial Futures and Options Exchange) converted from a floor-based to an electronic market.

The European cross-border electronic futures exchange will complete the move by September, when it will move its matching engine, Liffe Connect, off a large Sun Microsystems mainframe platform running the Solaris operating system (OS). Euronext.liffe operates five derivatives markets—London, Paris, Amsterdam, Brussels and Lisbon—all of which run on the Liffe Connect trading platform.

The exchange decided to replace the Sun host with Hewlett Packard DL585s running Red Hat Linux 4.U.3. The gateways will be replaced with DL360s running Red Hat Linux 3.U.5. Other components in the core will also be upgraded to HP boxes running Linux. "Many factors went into the decision and Sun's recent offerings were definitely considered," says the IT executive. "Their strategy is shifting to run Linux as well," he notes.

The process of swapping out the Sun hardware, including equipment at customer sites, began last November, and the exchange expects to complete the project by September when it's due to switch the core matching engine from Sun to Linux-Intel.

"While people would have laughed at you eight years ago if an exchange said it was moving to Linux and Intel, Johanek says, "The calculus has changed." Citing the huge amounts of R&D have gone into the Intel platform, plus the sheer number of systems using the Intel platform have grown, coupled with algorithmic trading as reasons for the IT change.

"Before we counted heads of traders, now we're dealing with traders who operate multiple models at one time," he says. Euronext.liffe's customers were on the Intel architecture. "Our customers were growing in number but the technology they were using was advancing faster than our own," says Johanek.

In addition, the exchange realized it was going to run out of headroom, he says. "Our ability to innovate faster than the demand from our customers" was questionable, he suggests.

"In a nutshell, performance, cost and scalability were the three most important factors, says Johanek. "The technology is 30 times less expensive for the same amount of performance," he says. "We're getting 30 times more bang for our buck in moving over to Linux," adds Johanek.

Johanek says migrating to Linux on Intel-based processors will improve throughput, resulting in a nine-fold increase in the number of contracts it can list on the host, and a seven-fold increase in the number of orders it can process. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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