Gearing up for a hybrid market, the New York Stock Exchange (NYSE) is equipping floor brokers with a new generation of wireless hand-held devices, custom-built by IBM -- even as its latest hybrid market filing is pending approval at the Securities and Exchange Commission (SEC).
The project is also a big win for IBM, which is jointly developing a new order management system (OMS) called TradeWorks and messaging system that will facilitate faster communication between floor brokers and upstairs customers.
The new handheld devices -- custom-designed by IBM Engineering & Technology Services -- will give floor brokers the ability to interact with specialists -- the human auctioneers -- as well as the automatic execution system known as Direct+.
"What the hybrid market will do is dramatically increase the amount of electronic executions and it will place a premium on the floor brokers to have good communications to the floor and to their customers," says Roger Burkhardt, the NYSE's chief technology officer in a joint press briefing held on Tuesday with its partner, IBM.
Over 650 hand-held devices -- the NYSE purchased 3,000 devices from IBM -- have been rolled out to floor brokers, traders and clerks who are currently using the devices to provide "market intelligence" or so-called market looks to upstairs institutions who are buying and selling stocks through the floor brokers. The wireless handhelds are also used to receive, manage and execute buy-and-sell orders from upstairs customers and to send reports back through the exchanges' OMS or third-party OMSs.
Meanwhile the NYSE says it's working with IBM to develop a new broker order-management system, called TradeWorks, for processing broker's buy and sell orders on the trading floor and a new messaging system based on IBM middleware. (TradeWorks will replace the existing OMS -- Broker Booth Support System.) Previously, the NYSE has built its own middleware, Burkhart says, "We wanted to get out of that business."
IBM has dubbed the joint project "Extreme Availability" because of the NYSE's stringent requirements for eliminating downtime and scalability for handling increasing volumes.
"Given the challenge of the NYSE being the financial center of the world, we cannot afford having anything that cannot stay up," says Willy Chiu, vice president, high performance, on demand solutions at IBM. Commenting on the exhaustive testing that lasted over a year, Chiu says this is one of the most "tested systems we have ever done, not unlike the space program." It's based on open standards, Java -- J2EE -- with IBM WebSphere handling the transactions and DB2 data management software and Tivoli management software acting as the back-end engine for TradeWorks storing the trade records and customer information as well the wireless devices, which have to be seamlessly connected.
In addition, the NYSE is installing 3,000 Linux workstations in the floor booths, custom-built by IBM as well. Traders, brokers and clerks use these workstations to receive real-time market information from the exchange floor to upstairs trading desks.
Although the NYSE declined to say which other vendors or systems integrators were in the running, according to the news release, the Securities Industry Automation Corporation (SIAC) -- the NYSE's technology arm -- chose IBM after inviting several vendors to participate in exhaustive proof-of-concepts.
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