Traders concerned over network capacity of Linux system

Market participants express worries that system not ready to handle more, faster algorithmic trades

The London Stock Exchange has formally acknowledged it needs to do more to scale its IT infrastructure before launching a new Linux platform on its cash markets.

Additionally, sources close to the exchange said significant network and server enhancements are taking place within the exchange, alongside major improvements to client connectivity.

The LSE this week delayed its migration to the Millennium Exchange platform following a massive network hit that took the smaller Turquoise venue, which uses the system, offline for two hours during peak trading. The exchange declined to comment on reports that a contractor was suspended over a "suspicious" network incident.

Millennium Exchange can process a capacity of 50,000 messages per second in a live usage. While this is a significant volume, market participants told Computerworld UK that 300,000 was a better target given the capacity of rival systems.

One source, from a trading technology firm, said: "There are even systems out there that can process a million messages a second." However, that technology was measured in laboratory tests and not live usage, which creates many more challenges on capacity.

The stock exchange, in a statement to the markets, said customer tests of the Linux system - developed in a C++ environment - had gone well in recent weeks. They had proved that trading messages worked fast and the failover datacentre worked successfully.

But it added that customers "have advised that more time is required to ensure the existing market infrastructure can process the high volume of traffic clients expect due to the increased performance of Millennium Exchange".

The decision to delay such a significant migration, until the technology is ready, is likely to be viewed as sensible from the perspective of resilience and stability. However other exchanges are fast developing systems that can rival the LSE's speed and capacity. Last week, NASDAQ in New York said it had a scalable Linux system delivering trades at under 100 microseconds, 25 microseconds faster than the LSE.

The London Stock Exchange will not migrate to Linux until 2011, after more development and customer tests are conducted. It said it "remains committed to ensuring that the migration to the new platform is completed with the minimum of risk".

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