NYSE Euronext Taps High-Speed Timekeeper For Electronic Markets
10 Gennaio 2011 - 12:29PM
Dow Jones News
NYSE Euronext (NYX) has become the latest financial exchange
operator to recruit a high-powered timekeeper to help measure the
speed of its electronic markets.
The parent of the Big Board announced a deal on Monday with
Correlix Inc. to monitor the flow of stock orders and pricing
information for traders on its Arca options market, with plans to
expand the capability to other platforms. The new system lets
exchanges track the operating performance of their markets and help
explain any hiccups in performance to customers, a service made
more important by the rise of high-frequency traders and
computer-driven strategies.
"It's about consistency," said Paul Adcock, executive vice
president at NYSE Euronext. He said the toll allows NYSE to check
whether it has a problem with its matching engine, which is the
software that matches bids and offers or another issue, or whether
slow trading is because "everyone was trying to hit the door at the
same time."
New York-based Correlix, backed by a number of venture capital
firms, already services Nasdaq OMX Group Inc. (NDAQ), electronic
stock exchange company Direct Edge, and CBOE Holdings Inc. (CBOE),
parent of the Chicago Board Options Exchange.
The speed at which trades are executed, known as latency, is
critical to algorithm-driven traders, though despite the competing
claims of exchanges their relative performance is less important.
Computer models are geared to the respective levels of latency at
each trading platform, and if there's an unexpected slowdown at one
venue, the trading program could stop trading there until the
perceived issue is resolved.
"Traders could use this to compare exchanges, but they're more
likely going to use it to make more money out of each specific
exchange," said Shawn Melamed, founder and president of
Correlix.
Melamed said each marketplace is like a multilane highway to the
matching engine that executes trades. Customers can choose any lane
they like, but don't necessarily know how many cars are in front of
them, or whether it would be smarter to switch lanes and take a
different electronic pathway to the matching engine.
He said his firm's aim is to help exchanges tell customers which
lanes might be plugged and whether it's smarter to take a different
route: select a different gateway or stop all dealing in a certain
stock like Google Inc. (GOOG) and keep trading the rest of the
portfolio.
NYSE Euronext's Adcock said the new feature is among several
efforts to make electronic trading more effective for the company's
busiest customers. His team has built a new order management tool
that gives traders a deeper view into how their orders are moving
through the exchange, and allowing them more control over
cancellations.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
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