Direct Edge Builds New Stock Exchange on Microsoft Mission-Critical Platform and Informatica Messaging-Based Trading SolutionBy Microsoft Corp., PRNE
Tuesday, December 14, 2010
Fourth-largest U.S. stock exchange chooses Windows platform over Linux and UNIX; reduces latency to 340 microseconds, enabling a 580 percent increase in throughput to help gain competitive advantage.
REDMOND, Washington, December 15, 2010 - Microsoft Corp. today announced that Direct Edge, a Jersey City,
N.J.-based stock exchange, has selected Windows Server 2008 R2, Microsoft SQL
Server 2008 and Informatica Ultra Messaging for its trading platforms. Among
stock exchanges, low latency is critical to competitive success. Direct Edge
wanted to reduce the already low latency of its system while supporting
vastly larger trading volumes. It accomplished those goals and more by
rejecting Linux or UNIX and instead building its new exchange on technology
from Microsoft and Informatica.
"When we put our stock exchange on the Microsoft platform, our No. 1 goal
was to achieve latency low enough to compete against the biggest exchanges in
the country," said Steve Bonanno, chief technology officer, Direct Edge. "We
built a real-time processing engine on Microsoft technology that published
several hundred thousand transaction messages per second. At 340
microseconds, Windows delivered."
"In building its business on a Microsoft platform, Direct Edge
demonstrates the success of our continuing commitment to deliver a solid
foundation for mission-critical operations in the financial services
industry," said Simon Witts, corporate vice president, Enterprise and Partner
Group, Microsoft. "With the support and dedication of industry partners such
as Informatica, Microsoft is pioneering a new paradigm for mission-critical
workloads, providing dependability and flexibility to innovate the
differentiated applications that are essential to achieving sustainable
competitive advantage in today's capital markets."
Since implementation, Direct Edge's market share has increased based in
part on the large boost in transaction speeds and volumes and the high
reliability of its new trading platform. With a market share of 9 percent to
11 percent of all trading volume in U.S. equities, Direct Edge trails the New
York Stock Exchange (30 percent) and NASDAQ (20 percent), and is in a near
tie for third place among U.S. stock exchanges. That milestone represented a
rapid rise for the company, which had been founded just five years earlier as
an electronic communications network and converted to a full-fledged stock
exchange in summer 2010.
Faster Trading and More Reliable Service
The exchange has already seen an increase in transaction volume from
current customers, which it attributes to the reduced latency. To maintain
that volume of business, Direct Edge had to offer its customers fast and
reliable service. By deploying Windows Server 2008 R2, Microsoft SQL Server
2008 and Informatica Ultra Messaging, Direct Edge has reduced latency by 83
percent, to just 340 microseconds, enabling a 580 percent increase in
throughput, and it envisions further cuts in latency. In addition to the
sharp reduction in latency, Direct Edge has also achieved low variation in
latency, which means customers and potential customers who are evaluating the
new performance numbers can understand how likely they are to achieve the
benchmark speeds in their own stock trades.
Direct Edge also chose Informatica Ultra Messaging to develop a
peer-to-peer design for efficient communications between applications within
the exchange platform. It also used the technology to eliminate daemon-broker
messaging components susceptible to failure.
"Direct Edge's success in achieving substantial latency reduction in
order execution clearly demonstrates how competitive advantage can be
achieved in today's capital markets with our advanced messaging solution,"
said Mark Mahowald, general manager, Ultra Messaging, Informatica. "Beyond
low latency, however, Direct Edge demanded enterprise-class scalability,
reliability and vendors with a vision. Our partnership with Microsoft has
enabled the two companies to meet the lofty challenge that Direct Edge put
forward for us."
Direct Edge boosted availability by replicating its order-stream in real
time for zero latency failover of trading applications. This complemented the
failover clustering and disaster recovery capability at the datacenter level
that Direct Edge gained through Windows Server and SQL Server. For continuity
between its two datacenters, Direct Edge uses hardware replication. Through
its use of failover technology at both the messaging and data management
levels, Direct Edge has gained 100 percent scheduled uptime to date.
Reduced Operating and Technology Costs
Direct Edge also has realized substantial cost savings in both operations
and technology. For example, Direct Edge saved between $3.5 million and $5
million in reduced operating costs by bringing the current platform to market
a year sooner. It also saved an estimated $10 million - the one-year
differential in costs related to clearing transactions. A 25 percent smaller
hardware footprint saved another $1 million.
"To achieve the execution excellence required by today's high-velocity
capital markets, companies such as Direct Edge will need to be continually
focused on reducing costs while they deliver superior service because many
customers regard financial services firms that cannot differentiate as
interchangeable," said Colleen Healy, industry general manager, Microsoft.
"Over the past several years, we have worked diligently to become
best-of-breed in the areas of scalability, reliability and availability of
our operating systems, application servers and development tools. As the
success of customers such as Direct Edge clearly demonstrates, Microsoft,
with our industry partners, delivers mission-critical solutions that allow
the world's leading financial services firms to differentiate on customer
experience, economics and performance."
Reduced operating costs and lower latency share a contributing factor:
reduced hardware needs. The current platform reduces the server count by 25
percent compared with the number of servers that would have been required to
scale the predecessor platform to support Direct Edge's current business
volume. That's a savings of between $1 million and $1.2 million - a savings
that will be incurred with each hardware replacement cycle.
Informatica Ultra Messaging technology, for example, reduces the
messaging footprint by 50 percent by eliminating the need for messaging
servers and storage area network devices. Microsoft SQL Server data
compression rates of up to 8-to-1 drive down the need for storage throughout
The reduced hardware footprint doesn't adversely affect scalability,
however. Direct Edge projects that the system can support up to 5 billion
shares traded daily with its current configuration and at least 10 billion
shares traded daily with hardware additions to the present architecture.
About Microsoft in Financial Services
Microsoft's Financial Services Group provides software that helps
financial firms transform the customer, employee and operations experience so
they can maximize opportunities for increased market share and profitability.
Microsoft software helps empower people and IT staff within financial firms -
and across key focus areas such as advisor platforms, channel renewal,
insurance value chain, enterprise risk management and compliance, and
payments. Through a combination of Microsoft- and partner-provided solutions,
customers enable their employees to turn data into insight, transform ideas
into action and turn change into opportunity. More information about
Microsoft's Financial Services Group can be found at
Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in
software, services and solutions that help people and businesses realize
their full potential.
Wendy Grover of Microsoft, +1-425-705-7609, wegrover at microsoft.com / NOTE TO EDITORS: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft's Rapid Response Team or other appropriate contacts listed at www.microsoft.com/news/contactpr.mspx.
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