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IBM, NYSE Team for Reliable Trades

UPDATE: IBM has secured a major contract to provide the New York Stock Exchange with handheld devices, servers and software to make sure the exchange's daily trades go uninterrupted.

Though financial terms of the deal were not disclosed, IBM will provide the NYSE with the technology for TradeWorks, a new ordering system that minimizes downtime for traders buying and selling on the exchange floor. This is crucial for brokers like the NYSE, which facilitates 1.6 billion trades each day.

The broad technology agreement, rumored for two weeks, was unveiled by Willy Chiu, IBM's vice president of high performance on demand solutions, and NYSE CTO Roger Burkhardt Tuesday.

The NYSE will purchase 3,000 handheld devices, custom-designed by IBM Engineering & Technology Services. Brokers will use the gadgets, linked to a wireless network, to buy and sell orders on the trading floor.

IBM is also supplying Linux workstations optimized for high-resolution graphics, but consume less power. Traders will use the workstations to pipe information from the exchange floor to trading desks upstairs in real-time.

IBM's WebSphere middleware, DB2 database and Tivoli management software will power the back-end for TradeWorks. DB2, which will store as much as $14 billion in transactions per day, will run on IBM's mainframe zSeries operating system (zOS).

The deal was brokered by the NYSE's main computer and communications operator, the Securities Industry Automation Corporation (SIAC).

Burkhardt explained the need for the upgraded technology and choice of IBM on a conference call. He noted that brokers quickly took to the company's first wireless handheld system four years ago and wanted to multi-task a lot more.

"The business challenge we had was how to take this whole environment to a new level with a much faster wireless network, a much more productive wireless handheld device and a new auto-management system, which we wanted to be built from the ground up using open standards technology and leveraging middleware we could buy from a blue-chip vendor," he said.

Due to the high volume of traffic and the high value of some of the trades, traders rely upon the NYSE's computer systems to be available as close to 100 percent of the time as possible. This can be daunting for any technology company because of inevitable hardware and software failures, as well as spikes in trade activity.

Chiu said IBM was happy to be chosen as the vendor after "multiple other vendors couldn't withstand the high standards and stringent requirements for availability and performance." Neither Burkhadrt nor Chiu would say what other vendors the NYSE worked with in testing for the endeavor.

IBM, through a combination of servers and Java-based infrastructure, claims to be the best technology provider in this space over rivals like Sun Microsystems .

Forrester Vice President and Research Director Mike Gilpin said that aside from competition from high-tech vendors such as Sun, IBM likely had to prove its mettle over the SIAC's proprietary technology -- and succeeded.

"So IBM had to prove that the WebSphere technology could both scale out and also handle the required messaging and trading volume, in a cost-effective way, and they did this," Gilpin told internetnews.com. "IBM also took WebSphere to higher heights of reliability (bullet-proof failover) than it had ever achieved before, with custom enhancements for SIAC."

Gilpin also said front-end upgrades will be plainly obvious to the traders, as IBM's Java client technology will provide a rich user experience.