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IBM, NYSE Set for Major Software Pact

In an example of how high-tech vendors are shoring up deals in the financial services industry, IBM will announce a major technology pact with the New York Stock Exchange (NYSE) next Thursday, internetnews.com has learned.

Steve Mills, senior vice president and group executive of IBM Software, and Roger Burkhardt, CTO of the New York Stock Exchange, will host the briefing at the NYSE's headquarters in New York City.

IBM refused to comment on the relationship, in which the NYSE will be a customer. But a deal between IBM and NYSE, powerhouses in their respective fields, would seem to be a perfect match.

IBM's software division could provide any number of infrastructure pieces, from Web services platforms supported by the company's service-oriented architecture (SOA) tools, to its latest WebSphere Application Server 6.0. But IBM's SOA momentum has been in overdrive lately.

The company Wednesday said it has refreshed its CICS Transaction Server by making it possible for Web services to run more efficiently on mainframes. Mainframes happen to be the mainstays in many large, established equities firms, such as the NYSE.

Wintergreen research analyst Susan Eustis broached this likelihood.

"One would assume IBM is going to push their SOA architecture, and it will be very close to the [CICS] announcement," Eustis told internetnews.com. "The SOA architecture is very powerful, because it pulls together the app server, the portal, the integration suite, the business processes -- and so you'll see IBM talking about a broad suite of products that run on open systems."

It is most likely a combination of software, supported by IBM's vaunted Global Services division (IGS), to ensure that the NYSE's electronic practice runs at a constant.

Reliable, always-on guarantees, believed to be fool's gold by some experts, are what high-tech vendors have been striving to provide financial services companies with. Some equities firms process millions of transactions per day, sometimes numbering in the billions of dollars.

Financial services outfits are attractive to high-tech vendors for many reasons. In a cyclical theory, banks and equities firms are relied upon to exchange a lot of money. Because of this, they often have plenty to spend to ensure the technology backbone they have will ensure transactions with great integrity.

For example, the NYSE is the world's largest stock exchange, with an average of 1.6 billion shares traded daily and a market capitalization of more than $17.8 trillion. This makes the firm a lucrative target at a time when competition among systems vendors is fierce.

IBM, which competes with Sun Microsystems, HP and Dell in the space, has made no secret about its intention to own the financial services space, as company officials noted in the third-quarter earnings call.

While Eustis said the SOA ties the software together and makes business processes accessible to people, she said SOAs used in concert with mainframes and blade servers running more Linux software offer compelling value propositions.

"Blades get rid of the wiring, which is half the cost of the server," Eustis explained. "Those are great for the financial community because they're cheap. You don't replace the mainframe so that's even cheaper."

IGS helps ensure that the purchased technology works, Eustis said.

The event should help IBM hold serve on Wall St. over rival Sun , which swept into New York City in September with its quarterly news release, vowing to "Take Back Wall Street."

At that event, Sun President and COO Jonathan Schwartz unveiled new migration programs to woo and wean customers off of Linux and Xeon processors from Intel, currently offered by rivals such as IBM, HP and Dell.

Sun vowed to offer Solaris on several platforms, commodity hardware, interoperability with other software and next-generation pricing models.

According to recent server figures from IDC, IBM maintains a hefty lead in revenue share over Sun, garnering 31.7 percent of the market in the third quarter compared to Sun's 10.2 percent share.