LSE’s Cisco ‘Switch’ Cuts Hosting Latency

The London Stock Exchange has upgraded all network switches—which disseminate market data from each of the group’s trading venues and route order entry, modify and cancel messages to market—in its UK hosting center to Cisco’s next-generation Nexus 3000 series, to reduce latency over the exchange’s network for trading firms, vendors and service providers located in the datacenter.

Before the upgrade, the roundtrip time for data across the LSE’s 10 Gigabit per second network was in the region of 30 microseconds. Following the upgrade—which took place after market close on Friday, July 6, to avoid disruption to traders—clients have reported a five-microsecond improvement in cross-connecting to LSE markets within the co-location facility, says Andrew Bailey, project manager for exchange hosting and proximity services at the exchange. “The new Cisco switches have a newer chipset... that enables faster processing ability, leading to lower latency,” Bailey says.

Though declining to specify which switches the LSE used previously, Bailey says the data delivery process remains similar between the old and new switches. For markets that operate on the LSE’s Millennium Exchange trading platform, the market data is transmitted via a multicast protocol through the new network switches, but at lower latency, he says. “One of the key criteria when selecting the appropriate network hardware is the ability to process and disseminate data as quickly as possible... it’s very important to the exchange, and also our clients,” he adds.

Bailey says the LSE decided to upgrade its switches after receiving continued client demand for the exchange to offer more space for hosting services, adding that it will shortly make additional capacity available. “As a result of the additional space, this presented a good opportunity to complete a refresh of some of our critical infrastructure—most notably the switches used by clients to connect to our markets. This has further reduced the latency for clients cross-connecting to our markets for trading and real-time market data from within the datacenter,” he adds.

The LSE carried out client testing on Saturday, July 7 to ensure all clients could connect to the new switches for market data and trading messages ahead of the start of trading on Monday, July 9. “These testing activities were performed by hosted clients on the weekend to ensure the change had no adverse impact, and to minimize the possibility of any issues for clients on the Monday morning,” Bailey says.