Although its climate is hotter, its industries more diverse and its market smaller, in some respects the Colombia Stock Exchange looks like any U.S. or European exchange. It grapples with the same technology issues -- such as how to get data latency below a few milliseconds and how to build an IT infrastructure that can easily scale and withstand market volatility and surges - that plague any exchange or firm with a large trading floor.The Colombia Stock Exchange (Bolsa de Valores de Colombia is its real name) was formed in 2001 out of three existing exchanges based in Cali, Bogota and Medellin. It is the country's only exchange for equities and fixed income. Its main business lies in fixed income, mostly public debt, and the equities of its 100 listed companies of which 26 trade actively. "We're making a lot of effort to increase the listings to drive future demand," notes Jitendra Puri, vice president of IT. During busy times the exchange handles 6,000 - 7,000 equity trades and 8,000 - 9,000 fixed income trades daily. "However, we're experiencing decline in volumes traded due to both global and local market conditions. " Puri says. But overall the exchange is growing - in fact, between 2005 and 2006, the Colombia stock market was one of the fastest growing worldwide, at about 110%. "It's not that high now, but we think with all the effort going on with the macroeconomic environment in Colombia and with regulation, this market is set to grow," Puri says. "We'll never be as large as Brazil or Mexico, but we could be the third largest exchange in Latin America, I think. We're pitching for that, and that is one of the reasons we embarked on phased technological transformation projects at the exchange."
Part of the transformation is the implementation of a state-of-the-art multi-class trading platform from OMX that initially will handle derivatives and equities. The exchange hopes to launch a derivatives market by mid-2008. It's made an alliance with a European exchange, MEFF, to create the first clearing house for the derivatives market in Colombia.
To handle all the integration efforts needed for these projects, the Colombia Stock Exchange chose a messaging bus and other tools to build a services-oriented architecture from Tibco.
Lowering data latency is a priority for this project. "The risk for latency at an exchange like ours is unmatched," Puri notes. "Only exchanges know what latency really means - a few milliseconds is a lot of delay for us." The Tibco software, which will be used for order routing, should help lower data latency as well as provide scalable and consistent quality of integration services as trade volumes increase.
The exchange uses a large suite of backoffice applications that are staying in place for now because "we can't make 100 changes at the same time," Puri explains. In the first phase of the project, the new applications are being integrated via the Tibco tools and from the messaging bus adaptors will be built to connect to the legacy applications.
By December, Puri says, Phase 1 will be completed and members will be able to send trades over the internet directly through the Colombia Stock Exchange's platform. The second phase of the project, integration with the new OMX trading platform and the clearing house, is due to be done in June. Sometime after that the exchange will put in place Tibco's Business Activity Monitoring dashboard.
Later, the exchange plans to build corporate and customer portals, also using the Tibco software. The entire SOA project should take about three years, Puri says.
Where's the return on investment for this project? "There are two ways of looking at a project like this - one is by the book, where you do an ROI calculation, and the other way is you believe in it and you do it because you know it's going to work," Puri says. "We did it the second way. But before you begin you have to have a clear idea where you're going, build your SOA strategy first, identify what business processes need to be streamlined, what can be reutilized, how you can leverage applications to support processes which are otherwise locked in silos, and come up with a SOA picture."
He describes his vision: "Why are we spending all this effort to use a world-class multi-asset trading platform? Because we want to take the exchange to levels of international trading standards in order to open our market to international investors so they can access more easily our market and have program trading connections directly with our platform. What we're doing we don't need for today or tomorrow, we're preparing for the future."