TradElect one year on: has facilitated year of record trading; further enhancements planned
Today marks one year since TradElect, the London Stock Exchange’s electronic trading platform, came into live service for the UK market. This next generation technology platform has provided the market with world-leading system performance. Latency has reduced from 140 to 6 milliseconds and capacity has increased 10-fold since TradElect was introduced. Further significant functional enhancements are planned in the next twelve months to support even greater market participation in the future.
Commenting on the one year anniversary of the new trading system, David Lester, Chief Information Officer at the London Stock Exchange, said:
“Market efficiency is at the centre of everything we do and we continue to innovate to drive growth on our markets. Since its launch 12 months ago, TradElect has delivered a step change in the trading capabilities to the London market and has set new benchmarks in terms of system capacity and performance.
“We continue to innovate and invest in further enhancements to TradElect, reducing latency and increasing capacity in order to meet developing customer needs and remain ahead of our competitors. As we grow and develop our highly liquid and efficient markets, TradElect continues to be scalable and agile in order to exploit new products and global markets.”
The significant investment in TradElect has helped facilitate the 82 per cent growth in electronic trading volumes on SETS in the last financial year. 98 of the 100 busiest trading days ever have occurred since the introduction of TradElect and 9 out of 10 of these days saw over 1 million trades made in one day.
TradElect is agile and scalable, enabling it to accommodate new products, order book features and asset classes in order to provide further business benefits and meet customer needs. Future plans for the trading system include:
- The migration of Italian equities onto TradElect in September 2008, subject to customer readiness. This will create the largest European equity pool and generate new trading opportunities for high performance technical traders that have been driving record volume growth in London.
- Further capacity upgrades to TradElect will double current capacity to 10,000 continuous messages per second in September 2008. A further increase in capacity to around 20,000 continuous messages a second will be made in October 2008. Thereafter capacity will continue to be scaled in anticipation of customer demand.
- Further reductions in end-to-end latency on TradElect by 50 per cent from six milliseconds to three milliseconds in October 2008. The TradElect matching engine performs at 300 microseconds (0.3 milliseconds).
- Improved market efficiency and risk management for market participants on the International Order Book with the introduction of a central counterparty is expected to stimulate further volume growth and build on last year’s record growth of 77 per cent in order book trades.
- Improved connectivity by launching a FIX interface to TradElect and a FAST streaming data broadcasting channel from Infolect early next year. As open-standard interfaces are increasingly being adopted by the sell and buy side, this will ensure that all existing and new trading customers can connect directly and easily to our order books.
- Innovative functionality with the launch of the world’s first combined cash equities and Contracts for Difference Market in Q1 2009 will produce a step change in volume growth. It will offer the market a unique way of trading CFDs on the same order book as the underlying equity. For investors it will cut the cost of economic exposure to UK equities and unlock latent demand.
- Continuing functional enhancements to the SETS order book will generate new trading opportunities by giving firms more choice and more flexibility in how they price their orders. Plans include introducing hidden orders, mid price orders and pegged orders.
TradElect was the culmination of a four year strategic investment in next generation technology based on a core set of principles, specified to build a multi-asset advanced trading architecture across all trading functions of the business.
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