Direct Edge Picks Up Where ISE Left Off
January 25, 2010
Upon its acquisitionof the ISE Stock Exchange from the International Securities Exchange in December 2008, Jersey City, N.J.-based Direct Edge found it had inherited the answer to a question faced by almost all trading venues today:
How to transform your firm's technology infrastructure in order to handle unprecedented growth in the amount of market data that has to be handled in the support of electronic trading-and reduce latency, at the same time?
The answer was already in place for Direct Edge, which operates the EDGA and EDGX trading venues as well.
Several months earlier, the ISE Stock Exchange had installed software to filter and distribute incoming messages to trading applications from 29West, a Chicago-based provider of messaging systems. The firm also currently serves Chi-X Global Technology (the technology services unit of Instinet subsidiary Chi-X Global) and the Chicago Stock Exchange.
ISE replaced a broker-based messaging product with 29West's Ultra Messaging for the Enterprise (UME) software. This created a messaging backbone that allows communication between applications spanning the front end ordering systems, order-matching engines and back-end compliance systems, according to 29West. The applications would subscribe to the data feeds needed and then messages would automatically be published to them. "Pub/sub" communication-or as it's referred to in the industry, "pub/sub messaging infrastructure-is when publishers publish a message to a given topic. 29West claims it ensures the fastest delivery of that message to all subscribers interested in that topic.
That meant electronic stock market operator Direct Edge could follow in ISE's footsteps when it came to upgrading its enterprise-wide systems. Direct Edge has applied to the Securities and Exchange Commission to establish its two main electronic trading networks, EDGA and EDGX, as stock exchanges.
As part of the transition to exchange status, both platforms will be relaunched at Equinix's NY4 data center in Secaucus, N.J.
Last January, Direct Edge announced that it had agreed to use Equinix's NY4 facility in Secaucus, N.J. as the primary data center for its next-generation trading system, pending regulatory approval of its two exchange applications. Last year, Steve Bonnano, the chief technology officer of Direct Edge, explained that company's biggest concern had been finding "a mission-critical infrastructure that basically would support our new exchange platforms." When the EDGA and EDGX exchanges are ready to launch, Direct Edge said it plans to simultaneously retire the current electronic infrastructure of ISE Stock Exchange, EDGA and EDGX.
"DirectEdge has been in a hyper-growth mode-we've experienced 48 percent growth year over year from 2008 to 2009," Bonnano told Securities Industry News this month. "We needed to find a couple partners, one of which became 29West, to help us handle this growth, and we went through a significant bakeoff process to determine who would be the best partner for us to handle that growth and continued projected growth in the future."
The 29West messaging middleware will be utilized by Direct Edge's EDGA and EDGX trading platforms. Direct Edge is still currently using a legacy platform, Tibco RendezVous.
While it awaits SEC response on its application to turn EDGA and EDGX into exchanges, DirectEdge is using ISE Stock Exchange for trade-through protection and to display quotes to buyers and sellers.
