Joe Mullich
Freelance Technology Writer
818-907-9109
Compaq
Reliability: The Ultimate Mission-Critical Mandate
The Financial Industry Shows Dot-Coms How to Provide Round-the-Clock Data AccessJoe Mullich
The International Securities Exchange (ISE) is the first all-electronic exchange in the United States. While the exchange looks to reinvent the options industry with its cutting-edge technical infrastructure, the ISE first had to address an age-old concern for the financial industry: How to ensure the traders always have immediate access to the system.
"Availability is one of the primary factors we considered in designing our network architecture," says Richard Pombonyo, vice president of marketing for the ISE in New York. "In a market that can be volatile, individuals or institutions can be at major financial risk if they can't get into our system to make a liquidating trade, take some hedging action, or cancel an order."
The solution for a system that can't afford to slow down or go down: The 64-bit Compaq AlphaServer systems running multi-site Compaq OpenVMS clusters, fault tolerant Compaq Reliable Transaction Router (RTSR) software to ensure transaction integrity, and Compaq ProLiant servers. (What are the Proliant doing. While it may be nice to mention the Prolinats, we do not want to leave the impression that they are an integral part of the ISE high availability solution unless it is.
"An electronic exchange is viable only when it is up and running," says Danny Friel, the ISE's chief information officer. "Open VMS provides the availability, scalability, and rock-solid reliability demanded by our business."
Indeed, this infrastructure is at the heart of ISE's plan to provide faster trading and more efficiency at a lower cost than floor-based exchanges. Existing options exchanges can handle 60 bids or offers per second. The ISE's system needs to handle 16,000 bids or offers per second. "The delta was enormous," says Gary Katz, senior vice president of marketing and business development for the exchange. "It's not the trading volume that's so complicated, it's the enormous number of quotes generated in the US options market that adds all that traffic to the system."
Business mantra
This kind of exponential growth is something that most Internet-based ebusinesses are trying to grapple with. While the Internet is turning the phrase 24x7 into a business mantra, the financial industry has long appreciated the need for high availability and immediate, round-the-clock access to information."There is no worldwide holiday," says Glenn Zorn, vice president of data center services for FactSet Research Systems, the Greenwich, Connecticut-based firm which provides quantitative analysis services for banks and financial institutions. "Tokyo doesn't celebrate Christmas. Other areas don't celebrate New Year's. So our systems don't get a holiday either."
The financial industry also knows the tremendous cost of downtime. The average credit card system that goes down for an hour represents a $2.6 million loss in lost revenue, according to the Gartner Group, the consulting firm of Stamford, Connecticut. A brokerage outfit that can't function for the same amount of time loses $6.5 million in revenues.
Downtime is far more costly than the immediate lost of revenues and employee productivity, though. Even more harmful can be lost future revenues, damaged reputation, and drops in a company's stock price and credit rating. A well know internet broker eBay, for example, had a 22-hour operating system failure on June 12, 1999. They eBay lost up to $5 million in revenues while seeing its stock price plunge and slicing its market value by $4 billion, according to Forbes Magazine.
A customer who's unable to log onto an E-Commerce site might click to a competitor and never come back. No wonder analysts agree that for every $10,000 in losses seen from downtime, the actual cost could be 10 times higher.
And no wonder that availability has become a mission-critical priority for the dot coms dependent on ecommerce.
Just ask Patrick Egervall, president of OM Technology in Stockholm, Sweden, who has been devising b-to-b ecommerce solutions long before most people heard of the phrase. OM Technology has been one of the driving forces of moving stock and derivative markets off trading floors and onto computer screens. OM designed its first system in 1985 as owner of Stockholm's newly merged equity and derivatives markets. Since then, OM has sold Compaq-based systems to financial markets around the world, including the system for the ISE.(next)