LSE Gets Millennium Bug With Focus On Tech Income
The London Stock Exchange (LSE) continues to roll out its super-fast MillenniumIT trading platform to other bourses, as the U.K.’s primary market increases its tech-driven income stream with a focus on helping to develop infrastructure in emerging markets.
In the past month alone, the LSE has announced that three exchanges on three separate continents have migrated to the ultra-low latency Millennium Exchange, operated by its fast-growing MillenniumIT technology division. The LSE is looking to build up its influence in other markets, much like what rivals NYSE Euronext and Nasdaq OMX have been doing with much success in recent times, while also forming cross-border partnerships.
The London venue is turning to alliances, following its failed tie-up with TMX Group, owner of the Toronto Stock Exchange, in June last year due to a shareholder revolt, rather than costly super-exchange mergers that also face falling foul of the regulators.
The Mongolian Stock Exchange (MSE), located in its capital Ulan Bator and the country’s only venue, migrated to the new Millennium Exchange earlier this month, marking the culmination of a 14-month project to completely modernize the country’s capital markets infrastructure.
As well as overhauling the market’s technology, the LSE has developed an education program for market participants and worked with the Mongolian government to re-write the country’s capital markets regulations and securities law. An official launch in Mongolia is scheduled for later this year.
“London Stock Exchange Group was very pleased to have been selected to work with the Mongolian Stock Exchange and we are delighted to have successfully delivered a world-class exchange platform,” said Xavier Rolet, chief executive of the LSE Group.
“The development of stable, efficient and transparent capital markets infrastructure is a vital step in Mongolia’s journey towards greater prosperity. London Stock Exchange Group’s MillenniumIT technology, now installed at the MSE, will create new and exciting opportunities for the country’s leading companies and allow them to raise capital, in Mongolia and overseas, with confidence. We look forward to the future and continuing to work with our partners in Mongolia.”
Italy’s main stock exchange, Borsa Italiana, based in Milan, which was bought by the LSE in 2007 for $2.2 billion, became the fourth of the LSE Group’s markets—following the London Stock Exchange, Turquoise and the Order Book for Retail Bonds—to migrate to MillenniumIT, also in the last month. Equity, structured product and fixed income trading at the Italian exchange will now take place via the Millennium Exchange. Borsa Italiana has also updated the configuration of its servers in Milan.
Johannesburg Stock Exchange (JSE), Africa’s largest bourse, also completed its migration to Millennium Exchange within the last month. The JSE has now moved its trading system back to Johannesburg from London—a transfer aimed at enhancing operational efficiencies and ensuring trading optimization for market participants. JSE has said that the relocation, putting an end to a decade of having the trading engine in London, would make it less dependent on the transatlantic cable connecting it to the LSE.
JSE is expected to attract more business from hedge funds and high-frequency traders and avoid the system glitches that have undermined the reputation of the previous trading platform, TradElect, which was also used on Borsa Italiana, as well as the LSE until February 2010.
The LSE bought Sri Lankan technology provider MillenniumIT for £18 million in 2009 as it sought to catch up with more nimble and technologically superior competitors such as pan-European multilateral trading facility Bats Chi-X Europe. Millennium Exchange boasts trading speeds of less than a millisecond compared to the 2.7 milliseconds produced by TradElect.
“These migrations serve to highlight Millennium Exchange’s extraordinary versatility,” said Tony Weeresinghe, chief executive of MillenniumIT and director of global development at the LSE Group. “From Mongolia’s fledgling market to Borsa Italiana, one of Europe’s largest exchanges, our technology provides world-leading latency, exceptional flexibility and scalability.
“The Mongolian project, in particular, demonstrates the speed with which our systems can be installed and activated even in a market with no history of electronic trading.”
MillenniumIT technology is now installed in over 30 securities exchanges across Europe, Asia, Africa and the Americas.
Last week, the rapidly-expanding LSE also announced that it had signed a memorandum of understanding with the Singapore Exchange to enable cross-trading of some of the most actively traded stocks on each venue. This follows on from the controlling stake it acquired in Anglo-French clearing house LCH.Clearnet in April as well as the acquisition last December of FTSE International, the index business. The LSE is also in similar talks with ASX, the Australian exchange, to cross-trade its most active stocks. The LSE has also recently bought a 5% share in the Delhi Stock Exchange, one of India’s larger exchanges.
Federated will pay £246m for a 60% interest.
Esma analysis of $200tn market will assess the impact of MiFID II.
Most funds are managed cross-border using passporting rights.
NEX CEO Michael Spencer will remain as a special adviser.
UK authorisation will be needed by end of implementation period.