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.
You recently finished upgrading NYSE Liffe U.S.'s trading platform. What were some of the major changes?
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.
What were the synergies between NYSE Liffe's technology team and NYSE Technologies?
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.
With SFTI connecting to Direct Edge last month, the network now covers the entire displayed U.S. equities market. Are you looking to replicate that in Europe?
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.
What are some of the challenges in building out such a large network?
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.
In light of the current economic conditions, how have NYSE Technology customers' demands changed?
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.
Are you planning to add more products to NYSE Technologies' offerings in the coming months?
Across the board, we're either launching new services on existing products or new products in their own right. For example, we have developed the Risk Management Gateway for firms willing to do sponsored access. We have the product in beta in the U.S. and we hope to deploy these in the summer. In addition, we are upgrading our data fabric architecture in support of our market data business.
How do you differentiate yourself from technology competitors like Nasdaq, Thomson Reuters and BT?
Our portfolio contains a comprehensive set of products and services that support low-latency trading and market data infrastructures, whether it [is] delivered across our highly resilient, multi-service network, SFTI, or processed through our gateway software, matching engines, or market data products and services. This represents a very comprehensive value proposition that links all stages of the trading life cycle. You're right, we have competitors in all of those spaces, but very few of them can offer products and services across the whole spectrum on the scale that NYSE Technologies can.
In January, NYSE said it was collaborating with Cisco on an Ethernet-based integrated messaging system. Has that gone live?
We have clients beta-testing that version at the moment. This is the 10 gigabit Ethernet version of the data fabric I was talking about. We would like our products to be vendor-agnostic, but Cisco is an important technology vendor to our industry and it was good to be able to demonstrate our ultra-low-latency messaging on their technology. We are continuing along that path but we are also considering working with other vendors to ensure we can offer our clients a superior technology-agnostic deployment on 10G Ethernet.
What other IT initiatives is the company working on?
All of our markets will be migrated to the Universal Trading Platform this year and next. We will be converting our NYSE and NYSE Arca markets to UTP later this year and NYSE Liffe U.S. in 2010. Additionally, we are building two massive data centers-one in Europe and another in the U.S.--enabling us to consolidate all our existing data centers and to offer collocation and other managed services in support of our low-latency trading clients. It's fair to say that every part of our technology infrastructure is undergoing rapid change at the moment and we are confident that our products and services will be the industry standard.
This article can also be found at SecuritiesIndustry.com.
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