From NYSE Euronext to Tokyo Stock Exchange, exchanges around the world are relying on the scalability, flexibility and reliability of Red Hat.
At market open on the morning of Aug. 10, the New York Stock Exchange saw an all-time message traffic record of 121,257 messages per second in one 30-second period, which includes orders placed, cancelled, executed, and routed. During this summer’s period of volatility, when stock markets experienced huge selloffs, followed by zigzags of surges and more sell-offs in following days, NYSE Euronext’s electronic trading platform didn’t miss a beat. Its electronic trading platform, running on Red Hat Enterprise Linux, powered forward without encountering any outages or hiccups, despite sharp spikes in volumes.
With approximately 8,000 listed issues, NYSE Euronext’s equities markets represent one-third of the world’s equities trading. Its mission-critical electronic trading platform demands high levels of security and reliability.
NYSE Euronext’s relationship with Red Hat began following NYSE’s acquisitions of Euronext and Archipelago. As these mergers cemented its position as the world’s leading and most liquid exchange group, NYSE Euronext sought to integrate and optimize its various trading platforms. NYSE Euronext turned to Red Hat Enterprise Linux for a high-speed, low-cost platform that offers freedom from vendor lock-in and a strong emphasis on security. By moving to Red Hat’s JBoss middleware, including JBoss Enterprise Application Platform and JBoss Enterprise Portal Platform, NYSE Euronext achieved 50-60 percent cost savings. Savings came from the reduced amount of hardware required to supports JBoss’s lightweight nature, and the fact that the product’s simplicity enables IT teams to be more productive.
“Red Hat is like water, it’s pervasive within our architecture,” said Steve Rubinow, chief information officer of NYSE Euronext. “Red Hat is extremely strategic and without it, most of our computers wouldn’t be running,” said Rubinow.
The shift to open source technology for its mission-critical platform is also occurring in similar high-intensity exchange environments around the world. Globally, Red Hat technology powers systems that handle more than 50 percent of the world’s trading volume. In total, Red Hat technology is in use in 28 stock exchanges in 24 countries.
What’s more, as markets around the world were tested by the summer’s volatility, other markets also reported that market turbulence displayed Red Hat’s ability to scale to never-before-seen levels. CME Group for example, which is the world’s largest futures market and a Red Hat shop, reported an all-time volume record on Aug. 9 with 25.7 million contracts trading across all asset classes.
The choice of open source for mission-critical systems such as high-volume stock exchanges is projected to continue to trend upward in the years to come. According to a 2011 report from Gartner, by 2016 open source software will be used in mission-critical software portfolios within 99 percent of the Global 2000 enterprises, up from 75 percent in 2010. The Gartner study also predicts that in the next five years 50 percent of leading non-IT organizations will use open source “as a business strategy to gain competitive advantage.”
Top Five Asia Pacific Stock Exchanges
In Asia-Pacific, Red Hat has been implemented in 12 stock exchanges, including all of the top five stock exchanges across the region. The Red Hat presence in the region includes exchanges in 11 different Asia-Pacific countries.
The Tokyo Stock Exchange (TSE), which has the third largest domestic equity market capitalization in the world and averages almost 2 billion shares traded daily, adopted Red Hat Enterprise Linux for its next generation trading platform “arrowhead.” With Red Hat Enterprise Linux, the TSE has experienced improved reliability, greater scalability, lower latency and improved flexibility and robustness.
“We have achieved a new level of technology innovation for Tokyo Stock Exchange,” said Yoshinori Suzuki, senior managing director and CIO at TSE. The new system aims to deliver a capacity of orders-per-second ten times faster than on its previous platform.
Philippines Stock Exchange is one of the world’s fastest growing stock exchanges — the exchange saw more than 80 percent growth in domestic market capitalization between December 2009 and December 2010. To cope with its rapid growth, Philippines Stock Exchange replaced a legacy system with Red Hat Enterprise Linux. The exchange’s transaction volume has doubled since the move to open source, and the Red Hat platform allowed the exchange to seamlessly scale to the new capacity level while maintaining high performance and reliability.
Vendor Flexibilty
Exchanges that make the switch to open source are finding the promise of an open architecture has advantages – particularly in complex IT environments. The ability to avoid vendor lock-in and have greater flexibility in choosing hardware vendors can be beneficial in heterogeneous environments often found at exchanges.
At the Lahore Stock Exchange, Pakistan’s second largest stock exchange, the IT environment included 15 varied software systems. Moving from a Microsoft Windows server system with the Oracle database to Red Hat Enterprise Linux enabled Lahore Stock Exchange to avoid proprietary lock-in while also creating a system that was more scalable, had better security and much higher reliability.
“Red Hat freed us from vendor lock-in and enables us to build our trading infrastructure to be stable, robust, reliable and high-performing,” said Asfaruddin Syed, head of IT for Lahore Stock Exchange.
When Deutsche Börse Group’s Deutsche Börse Systems sought to create a new client interface for a real-time transaction risk information system, it was looking to incorporate open standards. The goal was to give customers immediate access to valuable risk management data directly from European clearing house Eurex Clearing’s back-end systems without the need for customized adapters.
“We decided to implement Red Hat Enterprise MRG Messaging with AMQP because we favor open standards and we want to make it as easy as possible for our client banks to access the relevant risk data,” said Gerhard Lessmann, member of the Executive Board, Deutsche Börse Systems.
Reliability, Scalability, Security, Performance and Cost
Issues such as reliability, scalability, performance, security and cost remain essential to running high-intensity, mission-critical stock exchange environments. For many exchanges, it has been Red Hat’s strengths in these key areas that has spurred their moved toward open source.
In terms of security, Red Hat’s SELinux, developed in connection with the National Security Agency (NSA) and further enhanced by the open source community, provides exchanges with an extra edge. As Gajendarnath Mudaliar, vice president of technology of Inter-connected Stock Exchange of India Ltd. succinctly put it: “In terms of security, Red Hat is more secure.”
He added: “I would say an MS server is easier to hack if one does not install anti-virus engines in between. Red Hat will function very well on those aspects.”
Meanwhile, the importance of reliability in an exchange environment cannot be overstated. “Unplanned downtime is not an option,” said Jassim Bukashisha, IT director at Qatar Exchange. The Qatar Exchange, which handles approximately 12,000 orders a day, migrated to Red Hat Enterprise Linux from IBM AIX and Microsoft Windows. The Red Hat platform has met its expectations of performing reliably under pressure.
Qatar Exchange’s experiences with Red Hat’s reliability were matched by the experiences of the Lahore Stock Exchange: “There hasn’t been a single instance of unplanned downtime since we migrated to Red Hat,” said Syed of Lahore Stock Exchange. “The system is very stable. It can easily take the load of more than 400 concurrent users. We don’t need to restart the systems on a daily basis as we did with our Windows environment. With Red Hat there are no memory leakages and no stack overflows,” he added.
For National Commodities & Derivatives Exchange Limited (NCDEX), ensuring 99.99 percent uptime was crucial to the creation of a world-class commodity exchange platform. It implemented a Red Hat Enterprise Linux IT infrastructure designed for redundancy and failover, and achieved its required “four nines” uptime while also controlling costs.
“The solution is significantly more cost-effective than premier proprietary solutions, very secure, and flexible to our needs – not requiring us to depend on proprietary product roadmaps to address our business needs,” said Devesh Surana, Vice President, Technology NCDEX.
Dirk-Peter van Leeuwen, vice president of Red Hat Asia Pacific, has followed closely the adoption of open source. He summed up the shift toward open source in exchanges, based upon what he has seen in the Asia-Pacific region. “Red Hat’s advanced and innovative open source solutions have become the trusted platform to power mission-critical trading applications,” he said. “Red Hat solutions give stock exchanges the competitive advantage they need in order to compete in today’s markets as well as in the future.”
Tags: financial, industry, stock_exchanges
