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Attractive Alternatives to Mainframes Are Breaking Their Decades-Old Hold on Wall Street

THE CHALLENGE: Wall Street has relied on the dependability of mainframes for more than 40 years. But as the competitive environment demands more efficiency and agility -- and as alternatives mature -- firms are weighing the pros and cons of migrating off their mainframes.

While most securities industry participants consider themselves risk takers, their technology teams typically are just the opposite. You'd be hard-pressed to find a Wall Street CIO who would choose the unknown over a proven solution. And operating systems are no exception -- with their unwavering dependability, mainframes have maintained a more than four-decade reign as the platform of choice on Wall Street.

But as the marketplace demands more agility and technology continues to evolve, the age of mainframes may be coming to an end. Attractive alternatives have begun to flood the marketplace, and modernization seems inevitable.

"Alternative technologies are much better than they've ever been before," explains Dale Vecchio, vice president of Gartner's application development research group. "It's a big cultural and technological change, but the workload has been dripping off the mainframe for quite some time now."

The dependability of the mainframe environment is hardly debatable; according to Vecchio, they operate flawlessly 99.9 percent of the time. However, the disadvantages of the systems may outweigh the benefits.

"It costs a lot of money to operate a mainframe," Vecchio points out, particularly because IBM, as the single mainframe provider, has a choke hold on the marketplace, he notes. "They're continuing to reduce the price of hardware, but the software costs can be oppressive." In addition, Vecchio says, the skill sets of a new generation of IT professionals are more fitting for modern technology. "The majority of mainframe people are closing in on retirement age, and you just don't see a lot of people trained in this type of technology coming up."

And of course, like any technology that has been around for decades, there now are newer, more-agile options to replace mainframes -- and more-reliable ways to do it. Last October, Oracle, HP and Intel announced a combined solution to help enable mainframe migration. Major and minor solutions providers, from Unisys to Fujitsu to Microfocus, all have thrown their hats in the ring. "There are a lot of market forces unifying to bring a more cohesive message to the marketplace," observes Vecchio.

NYSE Leads the Migration

Still, Wall Street is not prone to being the first to jump on a technology trend. Perhaps ahead of the curve, however, the New York Stock Exchange has taken the migration plunge, embarking on an effort to rid itself of the mainframe.

With the impetus of the NYSE's new hybrid trading model as well as regulatory imperatives such as Reg NMS, the exchange, which relies on the Securities Industry Automation Corp. (SIAC) for its technology, knew it hade to make some changes in its data center to handle increased data volumes. "We knew the wave was coming," says Francis Feldman, VP of the Shared Data Center at SIAC. "We needed to ascertain our growth. When we sat down and looked at our numbers, we realized we [weren't] where we needed to be when market volume hit us."

With its mainframe capable of just 1,600 millions of instructions per second (MIPS), growth would have required investing in more CPUs, at a significant cost, according to Feldman. Instead, Feldman says, he decided it was time to move to a distributed environment, which much of SIAC already used.

Feldman maintains that the decision to migrate was cost driven. "The question comes down to the cost of the transaction in a mainframe environment compared to a client-server environment," he explains. "Both environments are scalable -- the differentiator is cost."

Feldman adds that SIAC's interest in migrating began around Y2K. "But the platforms out there [at the time], and the software to run them, were not as robust as I would have felt necessary to recommend a replatform," he says.

Now, Feldman says, "The hardware and software work. You can get the integrity of an operating environment -- in the form of screens and panels that run similarly to a mainframe environment -- and it's less costly. We've reached a time when alternatives are comparable to, or even surpass, the mainframe." Feldman relates that he began searching in earnest for a solution to help SIAC's data center convert to a distributed environment about two years ago.

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