NYSE Debuts Trading SystemNYSE Debuts Trading System

The New York Stock Exchange has unveiled an order-management system for its floor brokers, who handle the lion's share of trading volume despite the NYSE's efforts to become more electronic.

The system, developed by IBM, features handheld wireless devices for entering trades by brokers and for communicating with institutional trading firms.

Besides the handheld devices, the core ingredients of the new system, called TradeWorks, are IBM's WebSphere application server, Linux-based workstations deployed at floor brokers' booths, and IBM's DB2 relational database system. The exchange has been rolling out the infrastructure in stages since the beginning of the year, and several pieces of the system are now operational, said Roger Burkhardt, the NYSE's chief technology officer, in a conference call Tuesday. Others will be deployed in the new year.

Next year, brokers will begin using TradeWorks to transmit buy and sell orders as well as communicate with institutional trading companies. The schedule for completing the rollout of the new technology is uncertain, pending the Securities and Exchange Commission's approval of the NYSE's plan to become a hybrid manual/electronic market, Burkhardt said. That plan will increase the percentage of trades processed electronically each day from the current 10%. The SEC is expected to issue its final comments on the plan Wednesday.

IBM was one of several technology companies competing for the trading system. Burkhardt declined to name the others. The NYSE's environment has unique scalability and availability requirements for which IBM was deemed well suited, he said.

Each broker sends and receives an average of 75,000 messages per day, up 200% since 2002. In addition, each trade triggers numerous reports that must be archived for regulatory and historical purposes. Data-storage needs have escalated as the exchange's daily volume has increased from 1 billion to 1.6 billion trades since 2002.

The TradeWorks system is being deployed as NYSE tries to hold its market leadership position against competition from all-electronic exchanges such as Nasdaq and electronic communication networks. Internal productivity and transaction-processing efficiency were the primary drivers for the new system. The system also will make it easier for brokers to do more of their work electronically via the handheld devices. For example, Burkhardt said, the NYSE developed a new application that lets brokers perform complex trades involving multiple transactions with a single click.