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Jan. 26, 2010

Previously announced on October 7, 2009, the London Stock Exchange confirms it has begun a twelve-month migration to its new Linux trading platform. The LSE also agreed to a framework plan for its newly-acquired controlling stake in Turquoise, a large volume dark pool trading platform.

The stock exchange suffered a heavy fall in sales of real-time trading data. While the group’s IT revenues, from selling information and server hosting, grew three percent to £55 million in the three months to Dec. 31, 2009, real-time data sales fell a little than than 9.1 percent, to nearly three million pounds.

The LSE is getting ready for one of its most crucial years for technological change in its history. At the end of this year, the Linux-based Millennium-IT trading platform, which the LSE gained by acquiring the Sri Lankan company (of the same name) for £18 million in September, will be switched on.

It will replace the outgoing TradElect platform, based on Microsoft's .Net architecture and upgraded by Accenture only two years ago at a cost of £40 million.

TradElect has a very troubled history, with a number of high profile outages that have caused great embarrassment for the stock exchange. It is also understood to be significantly slower than specialist rivals such as Chi-X.

In spite of TradElect shortly being withdrawn, in November the LSE booked costs of £20 million on the platform, as it attempted to write it off its books and worked on upgrades to keep it competitive over its final year of operation.

Over the past few months, the LSE has repeatedly said that it expects significant benefits from the transition.

The new platform would give it “high performance” trading, as well as an “agile, efficient, in-house IT development capability”, the exchange said.

Additionally, with the increased level of money behind the operation, and following its purchase by the LSE would give it the financial backing it needs to grow sales of its own software development and integration services to other exchanges around the world.

At the same time, the LSE said it expects its acquisition of 60 percent of Turquoise to be complete by the end of February, with the aim of “driving trading volume growth”.

The LSE committed to fully funding the cash needs of Turquoise under an agreed framework for its first two years, and expects to book exceptional costs of £20 million in the next year following the acquisition.

Xavier Rolet, chief executive, calls both the Millennium-IT and Turquoise acquisitions good steps to enhancing the LSE’s trading offering.

The exchange now faces a major migration task over the coming months, and is betting its technological future on the new platform.

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Source: The London Stock Exchange.

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