Direct Edge Launches EDGA, EDGX "Next Generation" Platforms

Completing its transition from an ECN to regulated exchange status, Jersey City-based Direct Edge today announced the launch of trading across all stock symbols on its EDGA and EDGX "next generation" trading platforms, the result of almost two years of planning and collaboration with a raft of technology partners, including Microsoft, HP, Intel and Cisco Systems.

With around two billion shares traded each day and currently accounting for some 12% of trading in U.S. equities, Direct Edge is locating its new platforms - EDGA handling the higher performance needs of pro-active black box, stat/arb and active algorithmic traders and EDGX focused more on passive black box and agency algorithmic trading - at Equinix's NY4 data centre in Secaucus, NJ, with a backup facility operated by Telx in Clifton, NJ.

"Our customers can benefit from our new, next-generation exchange platforms and infrastructure that have been designed to improve the latency, consistency, throughput, and performance of our markets and enhance overall user experience," says Direct Edge CEO William O'Brien.

O'Brien - noting that the exchange's former trading platforms were spread across data centres operated by two of its owners - Knight Capital Group and the International Securities Exchange - expects the next generation platforms to enable the exchange to grow its business in areas such as dark liquidity and its Midpoint Match facility, which allows investors to buy or sell at the average of the bid and ask price, instead of having to buy at a higher ask price and sell at a lower bid price.

Direct Edge has integrated server, storage, networking, operating system, messaging middleware and connectivity from a number of vendors, a technology base that Direct Edge CTO Steven Bonanno refers to as the "driving force behind the solution" to the exchange's performance requirements.

Key components of the technology base include:

* Around 400 HP ProLiant G6 servers (for the primary and backup data centres), each quad-socket running Intel's dual-core Xeon 5500 series microprocessors, with Intel's Turbo Boost over-clocking technology. A move to the more powerful Xeon 5600 series is already planned, say Intel officials.
* Microsoft's Windows Server 2008 operating system and SQL Server 2008 database, as well as its .Net application framework.
* HP StorageWorks disk storage arrays, together with solid-state persistent storage from Texas Memory Systems.
* Cisco Catalyst 6500 network switches and Ethernet networking.
* 29West's UME reliable and persistent messaging middleware.
* Exegy's Exchange Connect ticker plant, providing data from other markets into Direct Edge's smart routing system.

The design and overall "back end" architecture of the Microsoft-based core operating stack was undertaken by Texas-based Scalability Experts, which designed the database schemas and provided an overall "proof of concept" to demonstrate that the requisite performance was attainable, according to the company's CTO Rajinder Gill. Scalability Experts focuses on complex database management issues, and counts Bloomberg and DE Shaw among its financial markets customers.

As well as providing backup data centre facilities, Telx also plays a key role in connectivity with the exchange's trading clients, in particular because it operates its own low-latency metro network connecting it to established interconnection facilities in Manhattan, at 111 8th Avenue and 60 Hudson Street.

Other technology partners include International Integrated Solutions, Wall Street Networks and Network Infrastructure Services, providing an array of physical integration and network infrastructure and planning services.

O'Brien says that while it's too soon to provide real-life latency statistics for the matching engine, the exchange does plan on making these public in the future, and hopes to be able to "brag" about them, in comparison to other, competing, exchanges.