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LSE close to binning TradElect; reviews alternative platforms - DJ

12 August 2009  |  9134 views  |  0 London  Bridge

The London Stock Exchange is close to replacing the £40 million TradElect platform, says CEO Xavier Rolet in an interview with Dow Jones Newswires.

In the interview, Rolet confirms for the first time that the exchange is nearing a decision to pick a new and faster trading engine to replace its current one.

LSE's TradElect trading engine was installed by Accenture in 2007 to a cost of £40 million. In September last year, trading halted at the LSE due to a computer glitch which resulted in connectivity problems with TradElect.

TradElect is one of Microsoft's most high profile examples of a financial platform running on its .Net technology. However, sources within the Exchange have privately expressed concerns with Accenture's maintenance and support of the trading platform.

Rolet did not go into details on how much the replacement engine would cost.

"In the past couple of months, we've reviewed technology solutions around the world and done testing. We're getting reasonably close to picking a solution," he told the newswire.

"We want to go a lot faster. We have 2.7 milliseconds at the moment...The goal is to increase speed to sub-millisecond for sure, and have the ability to go even below that afterwards," he says.

The increase in speed is an effort to compete with rival liquidity providers such as Chi-X, Bats and Turquoise. Chi-X has an average trading speed of 0.4 milliseconds according to Dow Jones.

As part of an overall cost cutting exercise, Rolet says the LSE will continue reviewing cost items like technology, general overheads, manual processes and compliance.

One month after Rolet took over from Clare Furse this June, the LSE cut around 120 jobs - affecting around 10% of the exchanges workforce in London and Milan. The company now has 1,135 employees.

Rolet indicates that more jobs will be shed over time. "There is not an ideal size," he told Dow Jones.  "Every job counts and we want to optimise our platform. This is a continuous process.".

In addition to job cuts and new technology, Rolet is also planning on reducing trading fees. "The primary factor in terms of sensitivity to influencing volume growth is price, in our view. Lower your costs, lower your fees and you will see volume growth," he says.

The LSE also plans to expand its Italian units - from its acquisition of the Borsa Italiana - across Europe. The Baikal, dark pool project, is also "in the process" of being launched according to Rolet.

The Dow Jones Newswire interview can be found here.

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