As the chatter around Nasdaq's failed takeover of the London Stock Exchange dies down, the LSE is readying to prove that it's worth its weight in trading. The exchange is preparing to launch its next-generation trading platform, TradElect, late in the second quarter. The platform, which has been more than two years in the making and has been functional for almost a year, is in final testing.
"This is all about the question, 'How are we going to take over the world?'" says David Lester, CIO at the LSE. "We're positioning the underlying infrastructure for whatever happens next with the markets. With the emergence of more competitors, we have to be able to compete, and I believe this system -- because it's fast, agile and reliable -- will help us compete better."
After making sure its customers' and information providers' networks could handle the proposed TradElect capacities, the LSE will be staging "dress rehearsals" in April and May in final preparation for the launch, according to Lester. "All of our customers -- the traders -- will come in, and over three weekends we will simulate the market on the new system," he explains. TradElect recently underwent a full simulation with the Johannesburg Stock Exchange, which licenses the LSE's older electronic trading platform, SETS, and will be migrating to TradElect before the LSE. During the one-day simulation, traders generated about 27,000 trades -- typically, they conduct about 30,000 a day, according to Lester, who gives the simulation an 8 out of 10 in terms of success.
The extensive simulations and dress rehearsals are key to ensuring the reliability of TradElect. SETS will be a tough act to follow, Lester says, noting that the LSE "is the only exchange in the world not to have had a single outage in six years."
As a high-capacity, scalable platform that can support multiple asset classes, Lester says, TradElect will help propel the LSE onto the global scene. "Our current system has to go down for four hours every evening to get ready for the next day's trading," he says. "The batch processing is '80s and '90s technology. You can't run a global market with a system that has to be down for four hours."