CTO Tackles Arca-NYSE Integration

With the proposed NYSE-Euronext merger on the horizon, Steve Rubinow, the newly named chief technology officer (CTO) of NYSE Group, is embarking on a huge project to integrate all the technology from the merger of Archipelago and the New York Stock Exchange.

In his keynote address yesterday, Rubinow told SIA attendees that NYSE Group is embarking on an effort to combine the two companies' systems and to rid itself of duplicative systems.

"We're trying to change the tires on a race car that's moving 100,000 miles an hour," Rubinow told SIA attendees. "Then there's infrastructure, there's people, there [are] data centers. We're taking a look at all those things. We're not taking a breather," Rubinow added.

To pull off the initiative, nicknamed the Manhattan Project, Rubinow intends to take the best and brightest from all the companies that came together - the NYSE, SIAC and Arca - and "come up with a greatly revamped approach for what we think is the right technology base of systems and operations for today and going forward, he told WS&T in an exclusive interview before the SIA show.

Instead of telling the teams to integrate NYSE system A with Arca system B, Rubinow is telling the technology folks that they are charged with building the biggest and most powerful stock exchange for the 21st century. Challenging old assumptions, he is asking the IT teams to inject fresh ideas, telling them to think about what it should include and how it would look different than what they have today.

"What we want to make sure is that the status quo is not maintained," said Rubinow at the SIA conference. Noting that he is a big fan of simplicity, Rubinow, the former CTO of Archipelago, which was acquired by the NYSE in 2005, said that Arca is a multiproduct, single platform company and that it would do its best to avoid duplicative systems, Rubinow told WS&T in the interview.

"Everyone wants to know how we're integrating," said Rubinow at the conference, noting there are many aspects to it. He says he is taking a look at people, infrastructure and data centers. "As we look at the big picture, we have too much." Instead of having five or six database vendors, hardware and networking vendors, "We're going to condense those down to one or two in each category," he said.

Right now, NYSE Group is in the process of comparing all the systems and wherever it finds duplication, will ask which system is better, said Rubinow.

At the same time, Rubinow told SIA attendees there are some projects that "We're not going to mess with in the short term." One of them is the NYSE's Hybrid initiative, which NYSE Group just wants to get out the door and see how customers react to it, he said. The IT staffs are being challenged to run the current operations and legacy systems and not drop the ball on the NYSE's Hybrid initiative.

While it's fun to look toward the future and redesign things, in the interview with WS&T, Rubinow stressed the importance of the NYSE Group meeting tomorrow's deliverables and schedules. Contrary to industry speculation that the NYSE might abandon or shut down its Hybrid project in favor of using Euronext's cash equities trading system, Rubinow said the Hybrid project is continuing. "Nothing stops Hybrid," he told WS&T, adding that it is going full-steam ahead, and calling it a very important project.

At the same time, NYSE Arca is launching a new options exchange next month based on brand-new technology that is totally different than the NYSE's technology. "That doesn't matter for now. That one is going out the door," said Rubinow at the SIA show. Arca also has a bond system awaiting SEC approval, and the NYSE has a previous bond system, which Rubinow said they're consolidating.

Even though the NYSE-Euronext deal awaits approval from U.S. and European regulators as well as shareholders, many industry participants are speculating about the technology consolidation and which trading platforms will survive. Many industry participants are wondering how the NYSE Group and Euronext will consolidate their various trading platforms. A Gartner report issued on June 6 warns that with the integration of Archipelago incomplete, realizing synergies for NYSE Euronext presents difficulties. "We think three years is very ambitious to make these huge changes - six platforms down to two, four networks down to one - when you're also doing the Reg NMS stuff and the Archipelago stuff and they're 3,000 miles part," says Peter Redshaw, research director at Gartner.

However, Rubinow said it was too early to discuss specific details on how the NYSE Group's trading systems would be merged with Euronext's electronic trading platforms.

In his interview with WS&T, Rubinow suggested that he is setting the stage for building a more agile technology infrastructure that can accommodate future mergers or acquisitions. "The only thing we know is that consolidations are likely to happen and mergers and acquisitions are likely to happen," he said. "If a Euronext or company XYZ comes along, we have to anticipate things like that happening and figure out how we will accommodate them and plug it into the central architecture."

"We have to develop an architecture that is more plug-and-play," Rubinow told attendees at the SIA show. <<<

More from the floor of the SIA Show Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio