London Stock Exchange – Moving Ahead With Technology

Faced with ever increasing competition, the London Stock Exchange is implementing plans to more than double the capacity of its trading systems within the next three months. Currently the LSE has the capacity to handle 4,200 messages per second. The upgraded system, which will be in operation by September, will have the capacity to process 10,000 messages per second. In October the LSE will introduce faster electronic trading which will process an order in about 3 milliseconds, half the current order processing time. In 2007 the LSE bought the operator of the Milan Stock Exchange, Borsa Italiana SpA, and the new trading technology is being implemented in Italy as well, in anticipation of an increase in trading.

Chief Technology Officer of LSE, Robin Paine, acknowledges that the new upgrades are partly triggered by competition, but are mainly in preparation for an expected volume growth. Rival trading platforms include Nyfix Inc., Chi-X Europe Ltd., Turquoise and Plus Markets Group Plc., with Bats Trading Inc and Nasdaq OMX’s pan-European exchange expected to be up and running by the end of the year.

About a year ago the London Stock Exchange implemented its new TradElect system as part of a technological upgrade. TradElect increased capacity, as well as decreasing trading times, and since the upgrade the LSE has experienced 98 of its 100 busiest trading days. For the fiscal year ended March 2008, the LSE reported a net income of 173.8 million pounds, representing a 59 percent increase over the previous fiscal year. The increase is attributed partly to equity investors’ trading, together with the acquisition of Borsa Italiana SpA.

The Federation of European Securities Exchanges’ annual conference taking place in Stockholm on 17-18 June 2008 will be attended by senior executives of trading platforms throughout Europe, including representatives from the London Stock Exchange. The key-note speaker, CEO of Nasdaq OMX Robert Greifeld, will address the subject “Technology and Globalization: Impact on the Exchange Industry” – a topic which will surely be of great interest to all present.