LSE IT plan enters last lap

THE London Stock Exchange (LSE) is preparing for the final phase of its migration to a commodity-based infrastructure.

The project, two years into its four-year development cycle, is intended to cut one-fifth off the exchange's £41m annual IT budget, and deliver a trading platform that can easily and cheaply scale up and add new markets.

Development of the final phase of the project is expected to start in May, in partnership with IT services firm Accenture.

But the two rivals bidding to take over LSE - Frankfurt-based Deutsche B”rse and Paris-based Euronext - have both outlined aggressive cost reduction plans should either win control of the London exchange, cutting IT costs by ? ¬50m and ? ¬ 94m (£35m and £65m) respectively (see Computing, 17 February).

Achieving these cuts will rely largely on the rationalisation of the two exchange's trading infrastructures - whichever pair it might be - onto a single next-generation platform.

LSE chief information officer David Lester told Computing he is on track to migrate the exchange's Sets trading platform by late 2006. But the bidders' proposals offer no guarantee that either of them will employ the LSE's technology roadmap.

'We should be ready to start rolling markets off the existing Sets platform onto the new trading platform by late 2006 and very early 2007,' he said.

'We will have parallel running, and we will probably move smaller markets over first to make sure everything is OK before we move the main Sets markets, such as the FTSE100.'

William Conner, lead analyst for financial services technology at Datamonitor, believes that of the two potential buyers, Deutsche B”rse is more likely to adopt the LSE's IT plans.

'Maybe if Deutsche B”rse took over it would consider utilising LSE's next-generation platform. This might work if the LSE is reasonably advanced with its implementation,' he said.

'Euronext, from what I've seen, would look to move the LSE to its platform, which was designed with Atos. The cost savings it has outlined wouldn't be achievable with the existing LSE platform.'

Any decision will have to wait until March, when the Office of Fair Trading delivers its verdict on how the bids can proceed.

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