HP OpenVMS Systems

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Success story:
HP technology helps the International Securities
Exchange (ISE) revolutionize the options industry
 
   
“OpenVMS is a proven product that’s been
battle tested in the field. That’s why we
were extremely confident in building the
technology architecture of the ISE on
OpenVMS AlphaServer systems.”
— Danny Friel, Sr. Vice President,
Technology/ Chief Information Officer,
International Securities Exchange

 

 
 
 
 
“The evolution that ISE has initiated in the
listed options industry relies on the
successful meshing of our unique market
structure and the solid platform of HP
systems that we chose for our marketplace.
Our technology is world-class.”
— Gary Katz, Chief Operating Officer,
International Securities Exchange
 
       
  Redefining the options industry
In May 2000, the International Securities Exchange (ISE) took one of the biggest risks on Wall Street: trading options with no trading room floor — only terminals. Today, the ISE has proven itself to be one of the industry’s biggest success stories. Debuting as the first all-electronic options exchange in the United States, the ISE has emerged as the largest global equity options exchange in less than three years.

Since its inception, the ISE has garnered an impressive list of global accolades. Recently ISE President and CEO David Krell appeared on Fast Company magazine’s debut list of “Fast 50” Champions of Innovations — individuals whose achievements have helped change their companies or society.

Commenting on the success of ISE, Krell says, “We think it’s not any one thing but the collective pool of benefits. It’s tighter quotes, better size in the market, immediacy of trading in an electronic environment, and transparency.”

While the ISE visionaries took a risk with their business model, they took no risks with their technology architecture. The core of the exchange is powered by HP AlphaServer systems running the OpenVMS operating system in multi-site clusters for disaster tolerance. OM Technology of Sweden provides the trading application, which incorporates HP Reliable Transaction Router (RTR) software for transaction integrity. A bulletproof lineup by any standards.

The catalyst for the evolution of the industry
The founding principle of the ISE is that technology fosters and infuses new efficiencies and operations innovations into securities trading.

Gary Katz, Chief Operating Officer of the New Yorkbased exchange, explains, “The evolution that ISE has initiated in the listed options industry relies on the successful meshing of our unique market structure and the solid platform of HP systems that we chose for our marketplace.

  We have the fastest turnaround time of any options exchange — under 0.2 seconds in the New York area. Our technology is world class. And our vision is on the future.”

Technology is critical to any exchange and for the ISE it was life or death from day one. Danny Friel, Sr. Vice President of Technology and Chief Information Officer of the ISE, talks about opening day. “There was electricity in the air knowing that the eyes of the industry were on us and our competitors were looking for any misstep. To see the first trade go across the network and see the systems run literally without a hiccup was a phenomenal event.”

Requirement number one: reliability
The ISE faced unprecedented challenges in building its technology architecture. The first and foremost requirement was reliability.

“We are a technology exchange,” explains Friel. “What makes us unique is the innovation we’ve brought to this industry. But innovation alone isn’t enough. You need a product that will be there and do what customers need it to do. So the key requirement for our technology architecture was that it had to be reliable.”

In creating its technology infrastructure, the ISE management team started by selecting OM Technology in Sweden for its trading system, and OM recommended OpenVMS because of its reputation for reliability and high availability. Sixteen of the world’s exchanges run the OM Technology trading system — and 15 of them run it on HP OpenVMS AlphaServer systems.

“I’ve been working with OpenVMS for 20 years,” says Friel. “OpenVMS is a proven product that’s been battle tested in the field. That’s why we were extremely confident in building the technology architecture of the ISE on OpenVMS AlphaServer systems. The fact that OpenVMS has a long history of running mission-critical applications was far more important to me than trying out the latest operating system that’s available on the market.”

 
“Fast recovery is critical because
technology will fail. What was key for us
was the ability to recover quickly from any
such failure. With OpenVMS clustering
technology, we were able to build a technical
architecture that has no single point of
failure.” — Danny Friel, Sr. Vice President,
Technology/Chief Information Officer,
International Securities Exchange
 

 

 

End-to-end integration
While individual technology components were important to the ISE, the fact that they have a history of working together in the real world was key.

“Part of our thinking in using HP end-to-end was that every component has to work together,” explains Friel. “It was comforting to know that all of these HP products have worked together successfully in many mission-critical systems in many industries for many years.”

The final element of the ISE equation for success was HP Services. According to Friel, “HP has been a terrific partner to the ISE. HP worked closely with the ISE in modeling our trading applications on different hardware and network configurations to optimize performance and developing a technology roadmap that provides an upgrade path for the key components of ISE’s technical architecture.”

Katz agrees, saying, “HP is involved in many different areas of the ISE — both as a strategic partner as well as an advisor. They have been involved with us that way from the very beginning, and we continue to rely on them for helping us maintain our position as the leader in the options industry.”

A platform for tomorrow
Friel explains “OM Technology has made a commitment that OpenVMS will be their operating system of choice for the foreseeable future. And HP backs its commitment to OpenVMS with a roadmap to the future. We’re looking forward to moving to the new HP Itanium®-based Integrity server family and achieving unprecedented performance and flexibility. We’re seeing nothing but positive indications that HP is the platform upon which we will build the ISE’s future.”

The HP OpenVMS platform is a critical part of the ISE’s vision — providing a powerful, flexible solution that will continue to turn risks into rewards for the ISE and its customers.

     
  Challenge number one: capacity
While reliability was the key mandate for the ISE architecture, capacity was its primary challenge.

In the options industry, capacity has been a daunting challenge for all participants.

Look at these numbers. Six years ago the options industry was hitting peaks of about 600 messages per second (MPS). Now, it’s seeing peaks of over 12,000 MPS. ISE is currently certified at 32,000 MPS and plans to advance to 52,000 MPS in the near future.

HP helps the ISE meet the capacity challenge through highly scalable OpenVMS AlphaServer systems. According to Friel, “Being able to handle very high transaction rates enables us to stay ahead of industry growth. If the requirements grow, we can add CPU boards into our processors, add additional nodes onto our OpenVMS clusters, and scale the system up.” Now that’s investment protection.

Fast recovery with no loss of data
The ISE designed its system to recover quickly should any component of the architecture fail. “Fast recovery is critical because technology will fail,” says Friel. “What was key for us was the ability to recover quickly from any such failure. With OpenVMS clustering technology, we were able to build an architecture that has no single point of failure.”

To protect against loss of data, the ISE relies on HP Reliable Transaction Router (RTR) for transaction protection. “RTR gives us confidence that regardless of any failures in the technology, the delivery of every single message is guaranteed,” says Friel.

 

 
 
Adaptive enterprise solution overview:
Increase performance to satisfy capacity demands
 
Challenge
 
Solution
 
Results
• Create an infrastructure that ensures uncompromised reliability
• Provide a platform that ensures instantaneous transaction processing
• Deliver cost savings that can be passed along to customers
 
• Implement OM CLICK Exchange trading application with HP Reliable Transaction Router (RTR)
• Employ OpenVMS clusters to ensure high availability, security and stability
 
• Unfailing reliability for trading equity options
• Fastest trading speeds of the industry — under 0.2 seconds in the New York area
• Significant cost savings, including widespread reductions in transaction fees
 
 
 
At a glance
  • Name: International Securities Exchange
  • Headquarters: New York City
  • Founded: 2000
  • URL: www.iseoptions.com
  • Products/services: The ISE is the first and only fully electronic options exchange in the United States. By developing an innovative market structure that integrates auction market principles into an advanced screen-based trading system, the ISE has emerged globally as the largest equity options exchange. The ISE continually enhances its trading systems to provide investors and the trading community with the most efficient, least expensive order executions possible.
 
Technology highlights
  • Hardware: HP AlphaServer systems running in an OpenVMS cluster environment
  • Operating system: HP OpenVMS v7.3-1
  • Storage: StorageWorks SAN consisting of EMA 12000 arrays
  • Services: Gold Support from HP Services
 
 

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