Outsourcing: As Nasdaq Demutualizes, the Amex Moves to Outsource

The American Stock Exchange's (Amex) three public domain Web sites are undergoing major change in light of the Nasdaq plan to demutualize. The Amex and Nasdaq were both subsidiaries of the National Association of Securities Dealers (NASD) and their technologies were closely related until recently. Looking to separate out its technology infrastructure from the Nasdaq-era without unnecessarily adding to the burden of its IT department, the Amex is in the process of migrating its network infrastructure to Intel Online Services.

Intel Online Services, a subsidiary of Intel, is providing its AppChoice managed hosting services for the Amex sites, which include Amex.com, Amextrader.com and Americanstocks.com. The hosting services cover the entire Amex network infrastructure, including data back up, Web site servers and operating system software for the three sites. The three sites themselves act as information gateways for the various Amex activities: the Amex.com is the main page and provides Amex information such as news, delayed quotes, market activity, earnings and portfolio tracking. The Amextrader.com site provides information in support of the Amex trading community, including information circulars on new listings, index options, end-of-day trading data, pricing and bulletins, among other trading-focused information. The Americanstocks.com site provides detailed information on all of the Amex listed companies.

The Amex has begun the migration to Intel Online Services with the Amextrader.com site, which was run in parallel with the previous site for several weeks to make sure that the information was disseminated exactly the same via the Intel hosted service. The second phase of the migration, which will switch over Amex.com and the Americanstocks.com site, is expected to be migrated by the end of this year. Once the infrastructure and applications are migrated and in one place with Intel Online Services, the Amex is also planning to bring the three sites together into a single portal over the next twelve months.

"We considered doing this internally, but our main job here from a technology perspective is to develop, implement and manage the trading on the exchange floor," explains Ravi Apte, executive vice president and chief technology officer at the Amex. "The hosting is a specialized job and obviously we have a lot of technical data, but we didn't want to divert the attention of the IT department to managing the Web sites." He adds that the IT department will continue to focus on transaction-related technologies while the task of overseeing the more information oriented technology of the three sites will be more efficiently handled by a third party.

The Outsourcing Process

Initially the Amex issued an RFP to "about six or eight different vendors," and evaluated those vendors according to certain criteria such as "our level of comfort with the company, their ability to support our requirements, the through-put and the management of the back office," says Apte. While he would not name the other vendors involved in the RFP process, Apte describes them as the "usual players," in the hosting space. Cost was also part of the criteria, but Apte emphasizes that the vendor's commitment to the effort and the Amex's comfort with their management rounded out the all-important total cost of ownership.

"In addition to the facilities, connectivity and security, we provide management of the hardware, operating system and software," says McGregor Agan, director of North American marketing at Intel Online Services. "So we're managing the sites on an all Intel architecture-based platform running NT and supporting Oracle." Intel Online Services assembled a scalable storage solution for the Amex from EMC and provides monitoring of the hosted environment as well. On the Amex.com site, Intel Online Services will also be providing full application management and supporting BEA Web Logic in addition to the AppChoice platform. Through a relationship with Akamai, Intel Online Services also provides a content delivery service. "Essentially we are able to be a one-stop shop for their complete outsourcing needs," says Agan.

Data Migration is Key

The Amex also has several arrangements with market data vendors for the three sites, which needed to be migrated over to the Intel Online Services platform. "The vendors will publish the data to the Intel Online Services site with the appropriate connections," says Apte. These vendors provide historical and company information as well as news to the three sites. Apte explains that new connections had to be established between the vendor-provided information, as well as internal data feeds and Intel Online Services.

"It's a lot of coordination work-ordering the lines then setting them up and checking that all the data flows properly and there is also the management aspect of it," says Apte. "And you can't just migrate a site like ours when there is so much data and content that goes in, so we've been running the existing Amextrader.com site in parallel with the Intel Online Services site to compare and make sure that everything is correct."

Intel Online Services also provides a monitoring service for the Amex sites in order to detect any data flow problems once the sites are live. "When you're receiving data from someone else you want to make sure that the lines are up, you are receiving the data and that you have a pro-active process to make that determination," notes Apte. "You don't want to discover the problem when a user calls up and says they're seeing three-day old data, that would not be good. If there's an issue or something drops or isn't working then the host should pro-actively know of it."

Long Term Vision

While the look and feel of the Amextrader.com site essentially remains the same, the Amex is working to change its Amex.com when it migrates to the Intel Online Services site later this year. Changes to the site include more actualization and a more customer-focused look and feel, says Apte. "It will be a refinement of the site we have now," he explains. "We've done a lot of work to figure out exactly who our consumers are and what kind of information they need so we are trying to make the site more oriented towards what those customers want."

Ultimately, the migration to Intel Online Services will also bring together the three Amex sites into one single portal. "I think to some extent people might get confused by the three Web sites," says Apte. "And it just makes sense to provide all of the information in one consistent place." The integration of the three sites entails more application work and as new applications are ready, they will remain hosted by the Intel site and will eventually be brought together. While there is still much work and migration to take place, Apte expects that the single Amex.com portal should be in place in the next six to 12 months.

"We're taking advantage of this opportunity so that as we are going to host in a new place, it will also be a new site," says Apte. The majority of the Amex data and hosting will take place at Intel Online Services' Chantilly, Va. data center. While he would not comment on the monthly fees charged by Intel Online Services for the hosting, Apte explains that the pricing structure is dependent on the number of servers used. Intel Online Services can also provide additional capacity on demand, should the Amex experience an increase in traffic or the need for more data.

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