Hong Kong Exchanges and Clearing (HKEx) has concluded the stabilisation period for its upgraded securities market trading system, AMS/3.8, which aims to reduce latency at the exchange.
Rolled out on 5 December, the new trading system achieved an average transaction latency of 1.4 milliseconds on its first day, against an initial target of two milliseconds. This is about 70 times faster than the previous system’s latency of around 150 milliseconds.
The two-week stabilisation period was intended to ensure market participants and information vendors were prepared in the event fallback arrangements would be triggered after the upgrade. In practice, no such measures were required.
The upgrade has expanded the trading system’s processing capacity almost tenfold to 30,000 orders per second. It has also reduced latency to two milliseconds on an average trading day, according to HKEx statistics based on the first two weeks of operation. AMS/3.8 processed an average of seven million orders and 716,000 trades a day over the period, with an average host processing latency of 1.5 milliseconds.
HKEx’s upgraded trading system also displays the 10 best price levels, compared to just five under the previous version, AMS/3.5. The market data broadcast rate has doubled from 1,000 to 2,000 stock page updates per second.
The upgrade is part of the exchange’s ongoing plan to enhance its own abilities to protect itself against competition from the Shanghai and Shenzhen stock exchanges on the Chinese mainland. HKEx plans to release over HK$2 billion (US$256.6 million) in capital expenditure over the next three years, above the cost of a next-generation trading platform whose development is due to begin after the upgrades of the exchange’s AMS/3.8 matching engine and MDS/3.8 market data platform are fully completed.
The exchange is also building a 31,400 square-metre data centre, scheduled for completion in 2012, to offer co-location services. The primary data centre for HKEx’s securities market is scheduled to move to the new site late next year and other facilities will be moved to the centre or established there in subsequent months. HKEx plans to roll out its hosting services in phases, starting late 2012.