Euronext Preps Platform Change

NEW YORK—To reduce internal order latency, Euronext plans to migrate its Nouveau Système de Cotation (NSC) equities matching engine to the open-source Linux operating system running on commodity hardware sometime during the first quarter of this year, exchange officials tell DWT.

For over a decade, Euronext ran two instances of the NSC platform—one for equities trading and one for warrant trading, on Hewlett-Packard's NonStop server line, nee Tandem. The bourse's equity matching engine currently runs on the NonStop S88000 series.

"The main driver behind this migration was the reliability," says Tarak Achiche, CIO of Euronext.

After an initial investigation in 2005 of available open source technology as part of Euronext's ongoing Technological Enhancement Programme (TEP), the decision was made to migrate NSC to an open-source environment.

"We were waiting for the moment when open-source hardware and software solutions were as reliable as propriety systems," says Achiche.

The opportunity to consider a change came when Hewlett-Packard introduced its new line of Integrity NonStop servers that incorporate the Intel Itanium chipset.

"When this opportunity opened up with the migration to Itanium or Linux, we decided on Linux," says Achiche.

Euronext is working with IT service provider Atos Euronext Market Solutions (AEMS), of which it owns 50 percent, and infrastructure and engineering teams from IBM to complete the transition from the NonStop environment to a Red Hat Linux distribution running on IBM BladeCenter servers against a DB2 database running on IBM's AIX operating system.

However, the new configuration is not carved in stone for Euronext.

"There are a lot of choices and it's a very dynamic market," says Achiche, referring to the x86-based server market. "We ran the database on AIX for the benchmark, but we aren't wedded to it," he adds.

As the first step in the overall migration, Euronext moved the NSC warrants matching engine to the new environment in July of 2006.

As a result, Euronext saw its internal order latency for warrants drop from an average of 100 milliseconds in 2005 to an average of 15 milliseconds in 2006. Euronext further expects to see it drop to below an average of 5 milliseconds this year once both instances of NSC are in production on the Linux/BladeServer environment.

While benchmarking NSC's new configuration, the platform sustained a workload of 25,000 orders per second and handled peaks of 50,000 orders per second for five minutes and 100,000 orders per second over a 10-second interval. The platform also supported over 100 million orders and 20 million trades over a two-hour period with 850,000 trades generated on a single instrument with a peak of 10,000 orders per second for that instrument, according to published results from the exchange.

In August 2006, Euronext also upgraded its existing network as part of TEP and experienced a 50 percent performance improvement in data distribution.

Although the migration was driven by the need to improve computing performance and not to reduce the total cost of ownership of the servers, Euronext has seen beneficial return-on-investment within its datacenters.

"We do see a difference in the power and footprint for the servers," says Achiche, acknowledging the amount of increased rack and floor space liberated from the legacy hardware.

Not all of that space will remain vacant since the new environment provides Euronext with the ability to increase NSC's performance by deploying more commodity hardware.

"Now we have the flexibility that if we find a need for improvement, we can change hardware even quicker," says Achiche. "This doesn't mean that we will change everything, but it does mean that the lifecycle might be shortened between one and three years."

Despite the movement to commodity hardware, Achiche has no interest in exploring a compute grid environment for Euronext.

"We wanted to increase our vertical power because in our industry you have a few instruments that trade extremely actively at times and that doesn't lend itself to five or six processing threads. You need very powerful processors," says Achiche.

What does this migration mean now that the Euronext and NYSE Group merger seems to be all but a done deal (see story, this issue)?

"Our intention is to run all of our cash business in Europe and U.S. on the same system. For the moment, it's too early to say since it is still being discussed by the shareholders," says Achiche. "It's still some months before we merge the organizations."

In June 2006, NYSE Group CEO John Thain and Euronext CEO Jean-François Théodore agreed that the new transatlantic exchange would integrate its three cash-trading platforms and its three derivative trading platforms into a single global cash-trading platform and a single global derivative trading platform by 2009 (DWT, June 5, 2006.)

In the near term, the multiple IT groups from Euronext and NYSE Group will be rationalized and the new exchange's IT management will be centralized.

In 2007, the Thain expects to see the exchange move to a single global network. "We currently have four different networks where we send messages between our different systems," Thain said at the time. Those four networks will be consolidated into one network.