Exchange entered into a technological race

In stock trading, and in computer technology is good to have the widest possible channels to send and receive data – the greater is the capacity, the more information and passes, respectively larger number of transactions can be performed.
This explains why the London Stock Exchange (LSE) is about to acquire shrilankiyskata Millennium IT company as part of a major overhaul of its technology for processing information.
Like other exchanges, LSE fights for share of the global flow of shares traded. Vital to his ability to attract a bear market to put emails from traders buying and selling before they reach the stage of implementation. That is what is meant by capacity or bandwidth.
Imposition of high frequency Algorithmic Trading and cause an explosive jump in the number of messages, which is one of the factors of 120% growth in volume traded shares in the United States over the past three years. He forced the exchanges to enter the technological race to stay in the game.
„Exchanges are based on the idea that a significant part of the sent messages will be converted into deals,“ said Bernstein Research analyst Dirk Hoffmann-backing. „High-frequency trading, however, completely changed the parameters. Now you must be able to handle huge amount of messages to attract the flow of orders, „he continued.
Deal of the LSE with Millennium IT will help it to increase its throughput capacity of 20 thousand messages per second to 1 million, which is a huge leap.
LSE currently lags behind the Chi-X Europe (225 thousand), one of the many small platforms that compete with incumbent exchanges of the Old Continent.
Similar changes in capacity shall be undertaken in North America. Last week, Chi-X Canada said it has increased its commercial potential platform 175 thousand messages per second, an increase of 500%.
Transatlantic Nasdaq OMX undergo extensive upgrade of its system Inet, including increased capacity to over 1 million messages per second.
NYSE Euronext’s competitive work on a new version of its Universal Trading Platform, which from next month will increase the throughput of the platform for shares and options on NYSE Arca 200 thousand to 300 thousand messages per second.
„When you get many orders from traders using algorithmic trading and high, they are mostly interested in the full predictability of the exchange capacity to absorb these orders,“ says Anthony Atia, head of the program UTP.
As useful for the markets seem to these developments, their speed raises the question: „Can the regulators to move along with them?“
Chris Pikals by the British telecommunications company BT, which heads the technology exchange unit, said that regulators generally focus on examining the data after the event rather than tracking them in real time.
„In fact, the ability of regulators to monitor the information is extremely limited. To say that we should strive, and it in the shortest possible time, „he said.

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Jeremy Grant, Financial Times