IBM and the New York Stock Exchange announced this week that they are collaborating on a new order management and messaging system in support of the 1.6 billion shares traded daily.
The order management system includes 3,000 handheld devices, designed by IBM Engineering & Technology Services, that will be used by brokers on the trading floor to place orders.
The IBM-NYSE work on the new TradeWorks infrastructure includes what is believed to be the most extensive testing ever done for a Java-based application environment. IBMs WebSphere infrastructure software, DB2 data management software and Tivoli management software will act as the back-end engine room for TradeWorks, processing the increasingly heavy flow of transactions. The DB2 back end will run on an IBM mainframe running zOS.
In addition to the handhelds, IBM is supplying custom-built Linux-based workstations with high-resolution graphics, low power and redundant connectivity. Traders, brokers and clerks will use these workstations to relay real-time market intelligence from the Exchange floor to upstairs trading desks.
IBM officials described the system as one of the most tested systems the company has ever developed, not unlike the testing that was used for the space program. TradeWorks is based on Java, J2EE and WebSphere, with DB2 on the back end storing the trade records and customer information. The wireless devices have to be seamlessly integrated, and the end-to-end testing reportedly lasted over a year.
One of characteristics of the tests involved mimicking the spiky nature of placing trades. The system needs to respond in subseconds as well as be able to handle failure. How does the system recover from a software or hardware break? Much of the testing was done to flush out those issues before it went into live production.
There was an IT team internal to the NYSE that looked for “the most devilish ways to break things,” according to Roger Burkhardt, chief technology officer of the NYSE. “Our team tried to conceive of the worst thing that could possibly go wrong, and then see how the system could recover. Were very happy to be out of the business of writing middleware and hand that over to IBM.”
While reliability is important to every company, the NYSE requires uninterrupted availability, as it is the worlds largest stock exchange, with 2,750 companies listed and a total market capitalization of more than $17.8 trillion. Since 2002, the average number of shares traded has risen from approximately 1 billion a day to 1.6 billion. Thirty years ago, trade volumes averaged 16 million daily. Today, brokers collectively send and receive an average of 75,000 messages a day, up 200 percent in the last two years.
The system has already replaced human ticket runners on the exchange floor. The trade communication goes from a brokers wireless handheld device, and bounces through the various internal systems to the end customer. Part of the role of technology at the NYSE is to handle growing volumes with same number of people. The exchange is processing trades today with the same number of people who handled one-tenth the number of transactions 30 years ago.
As the Exchange moves to a higher percentage of automatic execution, when the hybrid market becomes a reality, higher performance is a must. Rolling out early next year, IBM has created application software on the handheld that allows a broker to create a trading strategy, such as a tapered strategy, with one set of interactions. Implementing this strategy would have taken five or six orders in the past. There are 10 strategies built into the handheld device now. Burkhardt says, “This will become extremely valuable to the brokers and to their institutional customers going forward.”
A team of more than 50 IBM researchers, software designers and financial industry experts from around the world has been working with the Exchange on custom technologies, engineering methods and testing procedures aimed at helping establish the NYSE as a state-of-the-art example of “extreme availability.”
Some of the pioneering technologies and processes emerging from the NYSE project are expected to spill into IBMs work with other customers with similar requirements and commercialized in IBMs software products.
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