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NYSE Technologies to Facilitate Low-Latency Trading

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Moving forward on a strategic vision championed by CEO Duncan Niederauer, NYSE Euronext has created NYSE Technologies, a new company with a remit to commercialise the exchange group’s technical solutions, intellectual property and operational capabilities and sell them to other exchanges, liquidity venues and market participants.

The company is headed by industry veteran Stanley Young, most recently chairman and CEO at Atos Euronext Market Solutions, whose operations have been partly folded into the new initiative.

Young cites the new company’s mission as being focused on facilitating “low-latency trading and flow of transactions.” Key to NYSE Technologies’ mission will be delivery of the strategic Universal Trading Platform – both internally to support NYSE Euronext’s own markets, such as its recent debut for European bonds – and as either a complete or set of point solutions to customers.

According to Young, NYSE Technologies comprises four businesses:

1) Global Market Data – run by Ron Jordan and Mark Schaedel, which combines NYSE and third-party data to offer global equities, options, bonds and futures data products, plus administration services for usage and billing. As part of this endeavour, data feed handlers from Wombat Financial Software – acquired by NYSE Euronext in March 2008 – are being leveraged, and deployed on customer premises or offered as a hosted, managed service.

2) SFTI – a.k.a., the Secure Financial Transaction Infrastructure – headed by Ken Barnes in the U.S. and Don Brook in Europe (and the emerging Asian business). SFTI (often pronounced ‘Safety’) is a network that provides low-latency connectivity to trading markets (operated by NYSE Euronext and others) as well as value added services and content, which the NYSE fully acquired in 2006 when it bought out the America Stock Exchange’s interest in the Securities Industry Automation Corp. (SIAC).

Within this business, Murray White is responsible for co-location, smart order routing and direct market access (DMA) services, with an objective to create value added software-as-a-service offerings for the SFTI community, building on those already offered, including Portware’s execution management system and Progress/Apama’s complex event processing capability.

3) Exchange Solutions – under the leadership of Nabil Batlouni and David Shuler, provides technology and managed services to exchanges, liquidity venues, clearing houses and intermediaries. Crucially, this business (under Batlouni) also serves NYSE Euronext’s own markets and joint venture partners – including cash markets, Liffe and the Doha Securities Market in Qatar – with a mandate to reduce costs.

A component of the exchange services offered are so-called Common Customer Gateways (CCGs), offering standardised, low-latency access points to markets, based on FIX and other protocols. Technology from the 2007 acquisition of TransactTools forms the basis of the CCG functionality. Other components include matching engines and market data distribution capabilities (drawing on the former Wombat Exchange Platform).

Addressing the question of why the exchange group is now in the business of supplying potential competitors, Young says that there is recognition that “fragmentation is here to stay,” and that they see merit in facilitating market participants to access liquidity pools, whether NYSE Euronext-operated or not.

4) Trading Solutions – managed by Tony McManus, and charged with selling technology to market participants, including solutions for real-time market data distribution, enterprise messaging, exchange connectivity and execution facilitation.

A key component of the trading solutions portfolio is Data Fabric (formerly Wombat Data Fabric), a messaging middleware offering that will be adopted as a standard platform for all NYSE Technologies products. Data Fabric provides application-to-application communications via a number of lower level protocols, such as local shared memory, TCP, plus Infiniband and 10 gigabit Ethernet remote direct memory access (RDMA). Trading solutions also offers data feed handlers, transactional analytics and messaging gateways.

The company’s engineering function is organised into three groups: Core Engineering, under Conor Allen, with responsibility for messaging and R&D; applications; Applications Engineering, run by Carl Slesser, building data feed handlers, matching engines and other applications that tap into the messaging platform; and Solutions Engineering, headed by Gilles Herfeld, responsible for customisation of applications to meet individual client requirements.

In addition, Brian Hayes heads up managed services, responsible for providing hosted solutions and services. Young says that the exchange group currently runs six data centres in the U.S. and three in Europe, but the intent is to move to two new state-of-the-art primary and two backup facilities in the U.S. and Europe.

The primary data centres are currently being built, Young says, adding that the European facility is expected to come on stream in early 2010 with the U.S. data centre to follow. Third-party providers will likely be chosen to supply the backup centres. The exchange’s own systems are likely to draw on about 20% of the new data centre capacity, he adds, leaving 80% for the provision of hosting and co-location services. Young expects that the data centres will become “liquidity hubs” running applications from different liquidity providers and market participants, essentially forming a next-generation representation of a trading floor.

The formation of NYSE Technologies follows the creation last year of an interim organization, known as NYSE Euronext Advanced Trading Solutions, comprising the Wombat and Transactools businesses. Young characterizes that evolution as “the next strategic step” in terms of the exchange group’s commercial aspirations, as led by CEO Niederauer. Indeed, says Niederauer: “We’re no longer just a stock exchange; we’re an exchange that’s embracing technology to the fullest. We look forward to providing our customer base with a comprehensive array of commercial technology solutions.”

Also reporting to Young is Danny Moore, as chief operating officer. Moore, a former Wombat executive, was co-head of NYSE Euronext Advanced Trading Solutions, alongside Sam Johnson, who was previously CEO of TransactTools. As part of this latest re-organisation, Johnson has left the company

Also reporting to Young are: Tim Yockel, leading the sales function; Dave Manders, responsible for client delivery; and Ben Chrnelich as CAO and CFO. In addition, Peter Tierney leads business for the Asia region.

Young also carries the title of co-global CIO of NYSE Euronext, alongside Steve Rubinow. Both report to Larry Leibowitz, group executive vice president and head of U.S. execution and global technology.

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