Linux currently trails behind dominant platforms in the securities IT mix. TowerGroup estimates that Linux is now deployed on 14% of total servers at North American brokerage firms. In contrast, Microsoft has 54% of the market (both NT and 2000 combined), while Unix has 27% of the market.

However, the platform is beginning to gain significant traction at influential brokerages, such as Morgan Stanley, Merrill Lynch, Goldman Sachs and E*Trade.

Firms are using Linux in a number of ways, observes TowerGroup. One of the most popular is Linux "clustering," which involves either stringing multiple processors on to a single server, or linking different servers so that they are managed as a single machine and share their workload. This strategy offers a number of benefits, believes the analyst group, such as rapid installation, enhanced performance and improved uptime.

In addition, Linux boasts a lower total cost of ownership, and is more portable across a range of hardware.

As avenues for further IT budget cuts become exhausted, firms will have more incentive to migrate away from proprietary operating systems in order to reduce software licensing and hardware expenses, notes TowerGroup.

Despite the positive outlook, Dushyant Shahrawat, senior analyst in the TowerGroup Securities & Capital Markets practice, cautions: "While Linux now offers a compelling new technology alternative, securities firms shouldn't let current enthusiasm for the platform push them toward hasty implementation."

He notes that even firms like Credit Suisse First Boston - considered by many to be a 'poster child' for Linux in the securities industry - are not replacing their current mix of Unix, NT, Windows 2000 and mainframe platforms.

"Other firms should look to this lesson when analysing their current IT infrastructure, as well as business and technological priorities, to determine where Linux fits best in their environment," he says.