Nasdaq Stock Market Inc is to team with Tibco Finance Technology Inc to prepare for the multi-billion share trades a day which it must soon be capable of handling as the world’s highest volume stock market. Nasdaq, though much smaller in capital value terms than the New York Stock Exchange, is home to more listed companies than any other world market, hosting 5,400 companies versus 3,100 for the NYSE. Consequently, Nasdaq handles more trades than any other market; around 740 million a day on average this year, with two days so far (one in October and one in April) exceeding 1 billion shares traded. And under this kind of strain, the current system of distributing electronic quote information is beginning to creak a little, according to Tibco’s chief technology officer James Powell. Nasdaq’s own technical staff were understandably reluctant to talk about the volumes at which their systems might fail, but Larry Poleshuck, Nasdaq’s senior vice president of Systems Engineering, said current upgrade plans require a 2 billion share capability by the middle of next year at the latest. And this is where Tibco fits in. Tibco, based in Palo Alto, California, is a subsidiary of news and information services giant Reuters Group Plc. It will provide its real-time middleware as the plumbing between Nasdaq and its network of market makers and trader/brokers who constitute this wholly electronic trading environment. Under Nasdaq rules its 6,000 terminals, spread across the whole of the US, must each receive exactly the same quotation and trading data within 500 milliseconds, in order to put all traders on a level footing. And with the increasing number of stocks listed by the Nasdaq National and Smallcap markets, and the exponential growth in related derivative financial products (hundreds of which can be linked to the value of a single stock) this is causing bandwidth problems. The current broadcast system is proprietary and requires millions of individual messages to be sent to users every second. Added to which, new software has to be written to connect with each new user site. The Tibco system will use a single application programming interface (API) with data being broadcast to a single information bus. Subscribers then register to the bus to get the information feeds they need. No facts were released about the costs and timing of work, but Tibco’s James Powell was sanguine about the scale of the operation, we’ve built market data floors on this scale before he said. Nasdaq and American Stock Exchange (Amex) members are also about to vote on a merger between the two exchanges, which will complicate matters further, but Tibco says that Amex already uses its software extensively and the merger is simply another reason for Nasdaq to run with its middleware.
