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PHLX Is Finetuning its Options Trading Platform to Compete in Penny-Quoting

PHLX CIO Bill Morgan is enhancing PHLX XL, an electronic options platform, while building an electronic equity trading system with ECN functionality.

Bill Morgan

The Philadelphia Stock Exchange
1900 Market Street
Philadelphia, PA 19103


We moved into third place in equity options business, averaging close to 1 million contracts per day. In equities, the volume was 3.1 million shares per day in June. The equity and currency futures businesses are in transition with completely new electronic trading systems being built.


Started at the PHLX more than 20 years ago in data operations and moved into application development as a programmer analyst and senior programmer analyst. Other positions held include project management and VP department management.


B.S. in computer science from Peirce College (Philadelphia).


John McCarthy, former VP at Boeing, who came to the exchange as a consultant when I was a project manager. He mentored me on the fundamentals of management, such as good planning skills, solid project management disciplines and team building. He convinced me to take a management path rather than a technical path.

Top 3 Current Projects

Penny Quoting


Options is our biggest business right now and our biggest money maker, so we're making sure we have the capacity and infrastructure, as well as the strategy, in place to compete in a penny-quoting options environment.

Electronic Equity Trading


We're in the process of building a brand-new electronic equity trading system. It's going to have the functionality of what you would see in the ECNs out there today, and it's going to position the exchange to compete in the equity markets.

PBOT XL Initiative


Building a totally electronic futures platform. We're going to be introducing some very exciting futures products and trading them electronically.

2007 Initiatives


We will continue to evolve the PHLX XL program for options as competition demands, and add enhancements to go after certain types of business. We'll continue to grow the capacity and make sure the applications and infrastructure are ready to compete. As an industry, we do more than 1 billion quotes a day through the OPRA system, of which more than 380 million messages are done in Philadelphia. We'll also tweak some applications to introduce new features.

Enhance Equity and Futures Platforms

When it comes to the equities business, with the initial product due to launch this year, we'll be adding Day 2 features designed to grow that business. We'll be doing the same with PBOT XL as we talk and learn from customers.


IT Budget:

In excess of $45 million; that's supporting four businesses: options, equities, futures and the clearing services business for the equity program.

Key Technology Management:

  • Tom Wittman, SVP of Development,
  • Frank Ziegler, VP of Communications,
  • Bernie Donnelly, VP of Quality Assurance and Quality Control,
  • Frank Reidy, VP of Data Center Operations in IS,
  • Rich Ward, Director of Technical Services,
  • Al Pomerantz, Director, Chief Data Security Officer,
  • Bruce Smith, VP, Technical Consulting,
  • Bill Terrell, First VP, Market Operations

Size of Technology Team:

228, including market operations.

Percent of IT Projects Outsourced:

We hardly outsource anything because this is a very customized business. We can't go out and buy a trading system somewhere; we pretty much have to build what is deployed here. We save money by being masters of our own destiny.

Key Technology Partners:

Stratus, Sun as well as Nortel and soon, Juniper and IBM. The most important are Stratus, Sun and Nortel -- I consider them partners because they are vital to our day-to-day operations.

Success Metrics:

Return on investment. For us, ROI means setting clear business objectives and asking, Has a project met our business objectives, and has it increased our market share? PHLX XL is a perfect example. When you look at the money we spent on that program and you look at the increase in our market share, there's no question this is a project that has changed the way we do business.

Vision: The Next Big Thing

IT spending has been on the increase, and you'll see that trend, certainly in the securities industry, continuing in 2008. And the role of the CIO is going to continue to evolve and become more strategic as a business partner. If you look at the size of IT budgets, the alignment of that IT strategy with the business continues to become a more critical component of the business strategy. And the role of the CTO will evolve more toward the technical infrastructure side, except in small companies where the CIO wears many hats.

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

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