Stock Exchange sets out global strategy

The London Stock Exchange (LSE) is planning major enhancements to its trading systems to help maintain its position at the heart of the global finance industry.

The LSE revealed to Computing a wide-ranging vision, heavily dependent on technology, for how it will evolve its business over the coming years.

Chief information officer David Lester says the exchange's future lies in building a powerful 24/7 trading system that can handle 6000 to 8000 transactions per second - compared to 300 to 400 per second at the moment.

Lester wants to create an open and flexible exchange that can trade a wider range of products, such as derivatives, and serve a global market.

He also plans a move to more open financial standards where liquidity can easily shift between different bourses, and hopes that other exchanges will follow suit.

'We'd like to see others move to these standards as well, because I think it would allow exchanges to compete more effectively,' he said.

To realise the next-generation of the LSE's electronic trading service, Lester plans to change the existing specialist HP server-based system into a platform-independent application that can run on cheaper, commodity hardware for less critical business environments.

'We believe that these changes will position the LSE at the forefront of where exchanges will be in the next two to four years,' he said.

Technology is one of the LSE's main competitive advantages and will become even more so as financial markets become more global, says Lester.

'We need a system that runs 24/7 so that traders in different time zones can trade continuously on our service.'

Daniel Mayo, lead financial services technology analyst at Datamonitor, says the LSE's move is no surprise.

'Exchanges have historically been very territorial, but technology is now allowing them to become more global and move into new products,' he said.

The changes would also help the LSE to boost sales of its trading technology to other exchanges around the world, as it did with last year's deal with the Johannesburg Stock Exchange.