Exchange Technology
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In Exchange Systems Race, Nasdaq OMX Stressing Flexibility
May 18, 2009
While trading venues are taking a cautious approach to spending in the current economic climate, the industry is still looking for new functionality and systems for trading and clearing, says Lars Ottersgard, head of Nasdaq OMX Group's technology division.
"They want solutions that have broad capabilities and show flexibility to adopt new business models and new products and services," stresses Ottersgard. "Previously there was a very strong focus on just trading and performance," but that has shifted toward the ability to introduce new functionality and offerings.
Since Nasdaq completed its acquisition of Stockholm-based OMX in February 2008, the company has been reaping the benefits of the resulting synergies. Technology-driven OMX was as much a vendor as it was an exchange operator, which has made Nasdaq OMX "probably the leading provider of exchange technology at this point," says Sang Lee, managing partner of Boston-based research firm Aite Group.
The merger increased the pool of knowledge and technology talent, adds Ottersgard, who was head of sales at OMX before becoming president of the combined company's technology business. "It made us more capable of creating full solutions," he says. "From a pure technology point of view it has meant a lot. We could leverage the old Nasdaq technology--the Inet part--and combine it with existing technology from OMX." Nasdaq's platform was built in 2006 using technology from two acquisitions--the Brut and Inet electronic communications networks.
New Implementations
Recently, Nasdaq OMX, which has about 70 customers globally, has seen a handful of new customers roll out platforms based on its technology. On May 6, the Tokyo Commodity Exchange (Tocom) became the first Japanese venue to go live with a Nasdaq system. Tokyo-based technology vendor NTT Data Corp. performed the systems integration for the implementation. With the new platform, says Ottersgard, Tocom, which is the largest commodity market in Japan, can process millions of trades at millisecond speed.
In a prepared statement, Masaaki Nangaku, president and CEO of Tocom, said that the launch "signifies a new era for Japanese commodity trading and allows us to offer world-class trading functionality in line with international practices."
However, Tocom suspended trading May 12 for more than three hours due to connectivity issues. The exchange said at the time that it had not identified the cause of the problem, but a Nasdaq spokesperson says the incident "was not related to the trading system provided by us."
In April, the Iraq Stock Exchange (ISX) launched its first electronic trading and clearing system, a Nasdaq OMX platform that was implemented by contractor United Services and supported by funding from the U.S. government. At launch, five of ISX's 91 listed companies were available for trading on the platform; the others will be phased in over the next several months.
Multi-Asset Genium
In September, Nasdaq plans to launch a multi-asset-class trading platform that will be marketed externally as Genium. The platform, which the company says will incorporate "market-leading technology from both the former Nasdaq and OMX," is more "an evolution than a revolution," says Ottersgard. "If we look at our existing base from OMX, this will be a lot of familiar parts--the database structure, the APIs for members will remain with limited changes--but you will be able to leverage the performance and capability of the new technology."
