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Oct. 7, 2009

Last July, Linux News Today ran a new story on how the London Stock Exchange (LSE) was dumping Windows in favor of Linux. News that the LSE was moving from the Microsoft .Net-based TradElect to the GNU/Linux-based Millennium IT system is of course another win for Linux and the open source community.

In September 2008, right at the very start of one of the biggest market meltdowns in history since the October 1929 crash, the LSE's entire IT system brought the whole exchange to a complete standstill for almost a whole trading day. It was the first, and also the last time such an event would happen.

Since December 2007, the London Stock Exchange had been using a Windows-based system called TradElect. There had been some problems with TradElect, but it never had failed like it did on that terrible September day. And while the exchange totally denied that the collapse was TradElect's fault, they also categorically refused to explain where the problem really was and who was to blame for the huge fiasco.

Reliable sources at the stock exchange highly suggest that the problem was with the TradElect software. Meanwhile, the CEO that brought TradElect to the LSE, Clara Furse, has left without saying why she was leaving.

The exchange's new CEO, Xavier Rolet, is reported to have immediately decided to cancel all trading using the TradElect system, and to scrap the entire project.

The details of the LSE acquiring Millennium IT Systems provide some fascinating insights into the world of very high performance enterprise IT systems.

For example, the LSE is not just moving from one operating system to another, but it will also move from running someone else's software to running its very own in-house-developed programs, by acquiring a company that makes them: GNU/Linux-based Millennium IT Systems.

When compared to the bill of $65 million for TradElect, Millennium IT Systems, a Sri Lankan developer, is a bargain at just $30 million. What's more, the LSE will retain a 100 percent share ownership in the company and with full voting rights.

With this acquisition, the LSE will also gain an offshore development centre (located near Colombo, Sri Lanka) with about 450 Linux specialists and system developers, with about 300 in the software division alone.

The LSE will also own all of the underlying stock trading technology, which boasts high productivity, flexibility, robustness and considerably much lower costs than Windows-based TradElect.

But wait, it even gets better... With the LSE and its Italian subsidiary, Borsa Italiana, converting to the Linux operating system, Microsoft’s .Net technology is left with virtually no takers (at least as far as the LSE is concerned).

The only known remaining stock exchange to use TradElect is the Johannesburg Stock Exchange (JSE). "The JSE has been well aware for some time that the LSE has been considering its trading technology options," says Leanne Parsons, JSE’s chief operating officer.

The South African exchange will be holding discussions with its U.K. counterpart regarding the latter’s technology replacement project. But it's still "a bit too early in the process" to go into any detail, she adds.

The LSE predicts annual cost savings of at least £10 million (US $14.7 million) from 2011 and 2012.

David Lester, IT director at the LSE says "the new Linux-based technology and its underlying software is a lot lighter, nimbler and much easier and faster to install and implement into our daily operations. It will also enable much faster releases. The current wait with TradElect is three to six months, and this unacceptable to us."

Based on Microsoft's .Net technology, TradElect's system is very expensive and its reliability is questionable, in light of the LSE's fatal systemic crash in September 2008. Instead, the LSE's new GNU/Linux-based software is also faster, and offers several other major benefits such as better security and overall reliability.

The massively new stock trading platform will also be based on the Linux and Solaris OS.

On any given trading day, the LSE performs billions of stock trades that are calculated in just fractions of a second. In May 2008, the New York Stock Exchange has also adopted Linux to power the complex financial trading system that takes care of approximately $141 billion in stock trading volume on any given day.

This represents an important victory for the Linux community.

The NYSE's Euronext system also operates multiple exchanges including, the New York Stock Exchange, Euronext, Liffe, AlterNext and The NYSE Arca Options Trading Exchange. It too is strongly considering moving its trading platform to Linux.

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Source: The London Stock Exchange.

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