International Securities Exchange (ISE)
SIZE OF FIRM:
WHAT IS YOUR FAVORITE PIECE OF PERSONAL TECHNOLOGY?
In options, the move toward penny pricing is making low latency much more of a critical factor. Where in the past options systems were built for extremely high message width and massive bandwidth, now they're going to also have to be able to execute and turn around orders very rapidly with low latency. Conversely, stock systems are having to deal with greater message rates and higher bandwidth. Systems now have to be designed for both high bandwidth and low latency.
Key Technology Management:
Size of Technology Team:Approximately 110 employees.
Percent of IT Projects Outsourced:The trend at ISE has been to in-source technology projects as our IT team has grown. Whenever a new project is contemplated, ISE's technology team must submit a competitive bid, including projected time and budget for the project. ISE's proposal is then evaluated alongside those of third-party vendors before a technology provider is selected.
Key Technology Partners:OMX, HP, Microsoft.
2008 INITIATIVESMerging With Eurex
The merger with Eurex, announced in April and expected to close in the fourth quarter of this year, is going to dominate a lot of the activities going on around here over the coming years. We might want to consider integrating front ends of two markets to be able to share business opportunities in the future, but right now we are not anticipating merging technology platforms. It will be more integration of business opportunities and leveraging new revenue opportunities in the future.
Our Dex project, which is a joint venture with the Toronto Stock Exchange in which the ISE will be providing the technology solution for a new Canadian derivatives exchange. The launch date is March 2009, so 2008 will be the year in which we're building this new technology.
I would anticipate that within the next 18 months to 24 months, we will eventually be transitioning all options to penny pricing. We'll be dealing with the penny pilot until we have full penny implementation across all options products.
TOP 3 CURRENT PROJECTS
Growing the Fully Displayed Market BusinessGiven that we launched a fully displayed market in December 2006, a key focus has been for us to grow that business. As members got used to our midpoint-match offering, we've been very responsive to customer requests in delivering new functionality.
Move to Penny Pricing in QuotesWith the advent of penny pricing, we're expecting the rate of message increases to increase even further -- anywhere from a two- to three- to maybe a five-times increase in quote traffic. We had to build in increased capacity in our trading systems and our networks.
Depth-of-Market OfferingWe'll be providing a separate market-data feed using a FIX FAST (FIX adapted for streaming) Protocol. We're going to aggregate all orders, quotes and liquidity at five price levels down from the top of book. It's a much broader view of the market.