LME To Upgrade Decade-Old Feed

LONDON--The London Metal Exchange (LME) is currently upgrading its infrastructure for the Vendor Feed System (VFS) pricing feed. The new development, which is slated to go live in July, 1999, will replace the aging system that was developed for the exchange by Reuters in 1989.

John Vincent, market data manager at the LME, emphasizes that the upgrade, which will be named the Market Data System (MDS), will not result in changes to the data or format so vendors will not have to adapt to new lines or rewrite current feedhandlers or applications.

Rather, the changes affect the infrastructure hosted at the LME's London site. The LME embarked on the project in an effort to add capacity to handle the recent increases in volume and make its systems Y2K compliant. It also allows them to replace the outdated hardware that the current VFS runs on. "The changes will offer us the scalability we will need to expand our service as the exchange expands in the near future," says Vincent.

The new infrastructure will be NT-based but the speed of the feed will remain at 9,600 baud. According to Vincent, this is sufficient to handle the LME's current output, although it may consider upgrading at a future point.

In terms of functionality, the new infrastructure will also enable the exchange to store historical data. Previously, VFS was only able to handle throughput data but was not capable of storing it. Although the LME can retrieve historical data from the systems administration backup, it is not in a user-friendly format, says Vincent. Being able to store historical data may open up opportunities for the exchange to generate additional revenues from vendors or subscribers for such data, he says.

Another change will be the ability to manipulate data to generate derived prices.

Pricing for the service will remain at £40 per month per user site, but the LME plans to increase the charge for each additional user per site to £5 from £2 per month in April. The exchange currently has 5,500 screens displaying real-time data and about 20,000 receiving delayed data. Vincent says that about 70 per cent of the LME's customers have only one terminal on site.

The replacement for the incumbent system that was built by Reuters has been outsourced to a third party, British Telecom's Syntegra, which was selected from 10 companies (Vincent declines to name them).

In partnering with Syntegra, the exchange has opted to remain 'neutral' in terms of market data vendors, says Vincent. Its decision to partner with Reuters on the original development of the real-time pricing feed over 10 years ago created much controversy among other vendors, including ICV, Quotron and Knight-Ridder, who feared that Reuters would be at a time advantage in receiving data.

The LME later bought the feed from Reuters, but continues to use Reuters' network to facilitate the collection of contributed data, such as indicative prices from various market makers that operate outside of the exchange's trading hours.

The LME primarily trades on metals including copper, aluminum, lead, zinc, nickel, tin and aluminum alloy.