Trading venue operators from all corners of the globe are improving their technology to better cater for a growing army of electronic traders.
In addition to moving to a new trading engine supplied by Nasdaq OMX, SIX Swiss Exchange has also added co-location services for its trading members via data centre service provider Equinix, which the bourse says will diversify liquidity on its platform.
“We are less affected than any other European market when it comes to high-frequency trading (HFT),” Christian Katz, CEO of SIX Swiss Exchange, told theTRADEnews.com, adding that so far this year, the exchange had an order-to-trade ratio of below 20:1 and the biggest average execution size of any exchange or multilateral trading facility in Europe.
“We are not afraid of a deterioration in our market quality if the upgrade attracts more HFT flow,” added Katz. “We need a diverse range of clients and flow to ensure we have a good quality of liquidity. Maybe we have too few HFT firms at present.”
The upgrade will see the Swiss bourse migrate from its existing SWXess platform, already powered by Nasdaq OMX’s X-stream platform, to one combining the multi-asset functionality of X-stream, with INET – which is used to power Nasdaq OMX’s own markets in the US and Europe. The average round-trip latency of the new platform is 37 microseconds.
“We have spent a lot of time developing the multi-asset functionality for dealing with complex derivatives products and we see more algorithmic and low-latency traders diversifying into other asset classes,” said Ann Neidenbach, global head of technology and solutions at Nasdaq OMX.
The US market operator is also engaged in a project to upgrade the trading engine of proprietary trading system (PTS) SBI Japannext and the Nigerian Stock Exchange (NSE).
Similar to SIX Swiss Exchange, SBI Japannext will also migrate to the X-stream INET platform. The PTS will go live with the new technology on 24 September this year, with testing available from the end of the June. The new platform will let SBI Japannext trade orders in under 100 microseconds, with a matching rate of 80,000 messages a second.
Niedenbach believed the upgrade would help the PTS cement its place as the largest alternative trading system in Japan. SBI Japannext has been in locked in battle with Chi-X Japan, the PTS owned by Chi-X Global that launched in July 2010, to become the main challenger to the Tokyo Stock Exchange. In the week ending 20 April, SBI Japannext traded 2.86% worth of Japanese equities, compared to Chi-X Japan’s 2.05% according to software vendor Fidessa.
Meanwhile, during the first half of next year, the NSE will install X-stream for cash equities
"Through our commitment to world-class technology, we are setting the foundation for developing NSE to a West African financial hub,” said Oscar Onyema, CEO at NSE. “Moreover, with our new advanced platform in place we can broaden our product-base as well as build the capacity to offer hosting services to other exchanges in the region."
Spain goes alone
Instead of using a third-party provider, Spanish exchange group Bolsas y Mercados Españoles (BME), has opted to use its own technological capabilities to consolidate trading in equities, exchange-traded funds and warrants on one platform. The BME says the upgrade will also decrease latency by ten times and will accommodate future growth in transaction volume. The exchange noted that within the last year, the number of trades on its platform grew by 13% and the number of orders increased by 62%.
“We believe all the relevant criteria to position the Spanish stock exchange at the forefront of electronic trading have been met,” said Jorge Yzaguirre, director of the equity unit at BME.