Nasdaq OMX’s planned London-based NLX derivatives exchange will leverage the exchange group’s own Genium Inet technology to ensure low-latency matching. The exchange will base its primary matching engine at Equinix’s popular LD4 facility in Slough, west of London, where co-lo facilities will be available.
When it begins operating in Q1 of 2013 (if the regulators say yes), NLX will trade in both short term and long term interest rate futures and options, with clearing via LCH.Clearnet.
The exchange will accept orders in FIX format, with market data available in both FIX and Itch format, the latter offering lower latency.
While NLX will use Equinix as its primary hosting centre, it has chosen rival Interxion as its secondary host, in east London.
Genium Inet – built in Sweden and in use at the Singapore Exchange, the Hong Kong Exchange, BrokerTec and the exchange group’s own Nordic markets, among other market centres – is one variant of Nasdaq OMX’s Inet matching technology, with a matching speed of less than 90 microseconds for some deployments.
Another variant – X-Stream Inet – is developed in Australia and is considered to be the fastest generally deployed matching technology, with its implementation at the SIX Swiss Exchange matching in less than 40 microseconds. It has also been deployed by the SBI Japannext proprietary trading system in Tokyo.
Neither Genium Inet or X-Stream Inet is actually used by the U.S. Nasdaq Stock Market, which runs on proprietary technology, referred to simply as Inet (a throwback to technology that came with the acquisition of Instinet).
CME Group also plans to open a London-based derivatives exchange in the middle of 2013. Both markets would compete with the incumbent NYSE Euronext Liffe market and Deutsche Boerse’s Eurex exchange. Eurex is undergoing a technology upgrade designed to lower its latency.