The platform will be used to trade not only equities, cash and derivatives but also futures and commodities and, in addition to NYSE, will service Euronext, Europe's largest cash equities market; Liffe, a European derivatives exchange; and NYSE Arca Options, a U.S. options electronic exchange.
"Because of the merger, we have several different trading platforms, and we don't need them all," said Steve Rubinow, the CIO of NYSE Euronext, the official name of the combined trading exchanges. "The goal is to create one platform and for multiple products with the ability to trade anything that exists today and anything dreamed up in the future, regardless of geography. And Red Hat will play a pivotal role of it."
The challenge is to build enough flexibility into the platform without making it too complicated and slowing it down, he said.
"The logic behind the platform is complicated, but the hardest part is making sure it scales well and is very, very fast," at a cost-effective price, he said. Regardless of the fluctuations in stock market prices, Rubinow said that the market itself is growing "dramatically." Organic growth may be supplemented with acquisitions and possible expansion into Asia, he said.Red Hat's expanding presence
Given the platform's strong presence in the New York financial community, its record-breaking Wall Street transaction speeds and its existing foothold at the Exchange, Red Hat's central role in NYSE's new exchange is hardly surprising.
The new Universal Trading Platform will run primarily Red Hat Enterprise Linux 5 on small, commodity hardware or blade servers, said Rubinow.
According to Rubinow, NYSE has used RHEL in small deployments for quite a while. The major adoption came last May, when NYSE dumped its mainframe for Linux running on more than 600 Hewlett-Packard Co. ProLiant and HP Integrity NonStop fault-tolerant servers.
The goal of the migration was to modernize the exchange's trading systems, including auction trades on the floor and electronic trades, as well as messages to and from customers each day. Traffic volumes in both trades and messaging are large and only increasing. For the first quarter of 2008, the number of NYSE and Arca Options trades were a record 191 billion, with an increase in volume of 24% for the first four months of the year. Now, the number of messages associated with these transactions has reached into the billions per day.
"Our objective was to become more cost-efficient, process trades as fast as possible, and get all the support we need, with high reliability," Rubinow said. "We planned a wholesale migration from technologies that didn't have those attributes."
The HP Non-Stops, for instance, are perfectly good fault-tolerant machines, but NYSE needs servers that are faster and cheaper, he said.
Before selecting Red Hat, NYSE evaluated several other vendors, including Novell's SUSE Linux Enterprise, but Red Hat made "the most sense for us," Rubinow said. "It's not just the technology but the support structure, the whole big picture. Red Hat has a bigger presence here."
Addressing other issues, Rubinow said NYSE has no integration problems currently with Linux and Unix applications. As for virtualization, NYSE is assessing virtualization for supporting activities such as transaction posting and analysis but not for trading itself because of the loss in speed, he said.
To date the migration results have been positive, with transaction processing time decreasing from between 10 seconds and 12 seconds a few years ago to a few milliseconds today. The source of the performance improvement, however, is impossible to pinpoint because the operating systems and hardware were changed at the same time, Rubinow said. And the NYSE-written applications that run on top of RHEL 5 are also being tweaked constantly to improve performance, he said.
Rubinow couldn't say how much less Red Hat costs than its predecessor, but the platform has "definitely saved money" over proprietary software, he said. And Linux has been the right software platform for the job, he said.
"The quality of the Linux platform is greatly important to us, and Red Hat Enterprise Linux has exceeded our expectations," Rubinow said.
As the Exchange continues to migrate more of its own machines off legacy hardware through the rest of the year, he said, Red Hat will sell more subscriptions to NYSE. And in the near term, when the pending acquisition of the American Stock Exchange is complete as well as for the new trading platform, opportunities for additional Red Hat licenses will increase he said.