Two years ago, the London Stock Exchange (LSE) with its TradElec Windows-based C# and .NET programs crashed and took out the Exchange for almost 7-hours. That’s an eternity in stock market terms. Months later, the LSE’s CEO was history, and the LSE announced that it was dumping TradElec. Last year, the LSE announced that it was going to move to Linux. Now, the LSE is just about ready to switch over to Linux. Not only does it work, the new Linux-powered LSE runs faster than any other stock exchange on the planet.
I’m not surprised. If you want real speed and stability, you want to run Linux. The LSE has moved to Linux for the same reason the vast majority of supercomputers run Linux — it’s faster and better.
The LSE’s new system, Millennium Exchange, is based around Linux. It also uses Solaris and Oracle databases. Besides TradElec’s failures, the LSE also wanted to catch up with its rivals, as in today’s stock exchanges, transaction speeds are everything. Even when TradElec worked, LSE trades could barely make it under two milliseconds. That’s turtle-like speed compared to the hare’s, such as Chi-X Europe, with its sub-0.4 millisecond speeds, or the Tokyo Stock Exchange and NYSE Euronext (NYX), which achieve their speed with Red Hat Enterprise Linux.
With its new Linux system, the LSE claims it can deliver world-record transactions with down to 126-microsecond trading times. This is "twice as fast" as its closest rivals. We’ll soon seen if it can keep up its pace in the real world when Millennium Exchange goes from trial mode to production on November 1st. I expect the system may not be that fast on average, but I do expect most transactions to take about 200-microseconds.
But it’s not just about speed. In an interview with the UK publication IT Pro, LSE spokesman Alistair Fairbrother said that the LSE buying MillenniumIT, the company behind Millennium Exchange, "not only gives [us] a new high performance trading platform … that we will be migrating onto, but it also gives us control over future development releases." In addition, the move to an in-house Linux platform would save the LSE 10 pounds million per year from 2011 and 2012.
While Fairbrother played nice with Microsoft, saying that it wasn’t that the LSE was moving away from Windows to Linux, that’s actually exactly what the LSE has done. The LSE had made the move, not because they love Linux and open-source software for some abstract reason, but because it makes good dollars and cents sense. It’s cheaper, faster, and the LSE, not some outsider, gets to call the shots of its development.
I’m reminded that, from people on the street using smartphones running Android to Web users doing searches on Google to stock traders wanting nothing more than the fastest possible trades that we’re all becoming Linux users. It hasn’t happened the way we thought it might — with Linux desktops booting out Windows PCs — but it happening none-the-less.