Published on 09-May-2012
Santiago Stock Exchange
Managing Risk, Smarter Planet, Transforming Business
Leadership Series, Smarter Infrastructure, Smarter Risk Management
Santiago Stock Exchange wasn’t about to watch the industry evolve around it and simply react to change. It saw an opportunity to attract new liquidity to both Chile and the region as a whole. In the exchange’s efforts to become a global player, CIO Andrés Araya Falcone wore the hats of visionary, messenger, and salesman.
To successfully attract liquidity into the Chilean financial market from large investors in places like London and New York, the Santiago Stock Exchange needed to adopt the rigorous transaction processing capabilities needed to handle the growing volume of high-frequency and algorithmic trading activity—and do so from the ground up. So it built a trade processing solution that increased its capacity tenfold, cut latency to microseconds and enabled real-time fraud surveillance. The exchange’s transaction volume is up 50 percent in the first year.
Building support layer by layer The diversity of the exchange’s stakeholder groups—and their respective concerns and issues—made gaining support for the next-generation exchange a gradual, cumulative process. “We as an organization recognized the need to position the exchange for the future, but we also knew we needed to have everyone on board to get there. What bound it together was a common vision of how the [Chilean] market was evolving, and of our place in it.” — Andrés Araya Falcone, CIO, Santiago Stock Exchange
Sowing the seeds of an effective implementation Araya strategically populated the implementation team with a mix of seasoned industry-specific veterans (with lots of experience in building matching engines and the like) and technology-focused experts; the plan worked. “We created an environment where complementary skill-sets established a balance between experience and creativity—and gave us the best possible outcome.” — Andrés Araya Falcone
· 100 percent increase in real-time securities fraud surveillance · 9000 percent increase in transaction processing capacity · Substantial reduction in settlement risk by virtue of near real-time intraday settlement capability · 49 percent increase in trading volume experienced in first year of deployment · Reduction in order execution latency, from 200 milliseconds to microseconds · System reliability less than 99.999 percent
Smart is...stability that moves at the speed of the market
Smarter trade processing helps the Santiago Stock Exchange address higher trading volume more quickly and securely.
IBM Leadership Series – Santiago Stock Exchange
As Produced Transcript
The customers of the exchange are brokerage houses. In Chile, we have a lot of big international
companies and local banks or brokerage houses are our clients, too. In the Santiago Stock
Exchange, we are using direct market to access international brokers, too, from New York, Brazil
Time is money in the stock exchange definitely. So reliability is a key aspect. And usually 10
years ago, we used nonstop trading system because reliability was a priority. But today, we put
another challenge, that high throughput and low latency, and maintain the reliability.
Every single day come to the market new participants, new hedge funds, new clients, new clients
that need more low and low latency.
Today, the market is working with algorithms. The algos today in the market split big orders and
send order automatically to the market. That puts a lot of pressure in our infrastructure.
It was impossible to detect in real time suspicious activities in today’s complex market.
Decision making to change the infrastructure came from the necessity to update the previous
infrastructure. We decided to build in conjunction with IBM this new infrastructure. So we
presented this idea to board of directors who finally decided it was the best implementation.
The entire company was involved in this project, definitely. We worked together with research
and planning management, with financial area, with quality assurance area.
In this project, we changed everything, hardware, network, operating systems, language that we
used to develop system.
We were the first stock exchange around the world that used this product WebSphere Low
Latency Messaging in conjunction with trading engine in stock exchange environment. We are
very proud of it.
With complex event processing WebSphere Business Event, our surveillance team now could
receive in real time alerts for a single suspicious activity in the market.
The name of the service is trust. So our clients have to be sure that their data are highly
protected, and we use Guardium to protect our clients’ data.
We increased 80% of our trading volume. I am definitely sure that we increased this volume
because of the new infrastructure.
We are seeing that in this year, the trading volume will increase more than 60% again.
In the previous infrastructure, we processed order system in three milliseconds. Now, in the
current system, we process the orders under millisecond.
What excites me with this new infrastructure that we deal in conjunction with IBM, that now it's
time for our clients to attract more and more liquidity from local and foreign investors around the
Products and services used
IBM products and services that were used in this case study.
BladeCenter H Chassis, BladeCenter running Linux - Red Hat
GTS Enterprise Services, GTS ITS Security Services: Data Security Services