In Crisis, NYSE's IT Offerings Appeal to New Customers

By Alexa Jaworski 

As chief executive of NYSE Technologies, Stanley Young is guiding NYSE Euronext's efforts to sell its technology and operational capabilities to trading venues and market participants. In a financial crisis where IT budgets are being slashed, the exchange operator's hosted network and trading infrastructure are proving to be good for business.

"Our focus at the moment is on ensuring that all components of our current portfolio are performing to their highest capabilities," says Young, who is also co-global chief information officer of NYSE Euronext--dual roles he calls "highly complementary." The commercial technology unit aims to ensure that its "foundation is built on rock-solid technology," he says, as it goes up against competitors like Nasdaq OMX Group, Thomson Reuters and BT.

Young, previously chairman and CEO of AEMS, has also served as worldwide director of financial markets for Hewlett-Packard Co. and spent 11 years at the London Stock Exchange, where he focused on strategy development and implemented trading systems.

The year-old NYSE unit that Young leads is the product of several acquisitions over the last several years, combining the Secure Financial Transaction Infrastructure (SFTI) connectivity network, data management technology vendor Wombat Financial Software, enterprise messaging systems provider TransactTools and Atos Euronext Markets Solutions (AEMS), a trading and clearing platform company that Euronext co-founded in 2005. When NYSE Euronext bought consulting and integration firm Atos Origin's 50 percent stake in AEMS in late 2007, the exchange operator acquired the NSC cash trading and Liffe Connect derivatives trading technology.

In February, NYSE Technologies upgraded the Liffe Connect platform for NYSE Liffe U.S., the futures exchange it launched last fall. In an interview with Securities Industry News, Young, previously chairman and CEO of AEMS, discussed the Liffe Connect enhancements, NYSE's move to a single trading system--the Universal Trading Platform (UTP)--the expansion of the SFTI network, and how the downturn is affecting business.

Essentially, we took a previous version of Liffe Connect running on NYSE Liffe U.S. and we upgraded it to our latest version--called v10--which also powers our NYSE Liffe derivatives market in Europe. Functionally, it's very similar to the old version used by the Chicago Board of Trade, but v10 is much faster and includes enhanced collocation abilities. In addition, we took the opportunity to introduce two components from our Universal Trading Platform [UTP] architecture--the Exchange Data Publisher for market data dissemination and the Common Customer Gateway. By doing this we are "future-proofing" the solution to enable an easier migration to UTP in the future.

They are both, in effect, one and the same team. We tend to think of all of our technology resources as being fungible across the NYSE Euronext corporate entity. This project was delivered by a combination of the application team in London and the operations and infrastructure team from the U.S. It's a real-world example of our global enterprise working together in a highly effective and efficient manner.

Europe obviously has a different market model from that of the U.S. The idea is to make SFTI ubiquitous in support of trading in Europe, with our priority being to support our own market deployment. 2009 will be about [taking] our legacy network infrastructure in Europe that supports our cash and derivatives business and replacing it with SFTI. At the same time, though, we are opening dialogues with other venues in Europe to see if we can link SFTI to their existing infrastructures to enable participants from one infrastructure to link to the other seamlessly.

I think the first challenge we had in rolling out SFTI in Europe was the fact that we are also implementing a global, "follow the sun" operating model. By aligning the European technology organization with the U.S. organization, we are able to monitor the global network from either the U.S. or Europe. We had to ensure we had all the tools, processes and people to enable us to do this successfully and we have made excellent progress in achieving that.

The second challenge is maintaining the old while migrating to the new. We set an aggressive plan to build the infrastructure and to convert the existing client base from the previous network to the new one. While building a new infrastructure is not that difficult in itself, the real challenge lies in migrating clients in a way that doesn't disrupt their business. We're carefully managing that as we roll out UTP in Europe.

One thing that hasn't changed is the demand for faster and faster technology. So, the deployment of UTP in support of our cash markets and Arca Europe has been very welcome. We've seen a dramatic improvement in the latency, and therefore the performance, of those markets in Europe.

What we are starting to see is a large number of firms are now much more willing to talk about how we can manage components of their infrastructure for them. This wouldn't have happened nine or 12 months ago. A number of firms have traditionally viewed their network, market data and trading infrastructures as critical parts of their core value propositions to their clients. We're starting to see a change in that, and firms are starting to question whether they really need to manage these components themselves, particularly when NYSE Technologies has a very compelling product suite.