Direct Edge Builds New Stock Exchange on Microsoft Mission-Critical Platform and Informatica Messaging-Based Trading Solution

Fourth-largest U.S. stock exchange chooses Windows platform over Linux and UNIX; reduces latency to 340 microseconds, enabling a 580 percent increase in throughput to help gain competitive advantage.

Microsoft Corp. today announced that Direct Edge, a Jersey City, N.J.-based stock exchange, has selected Windows Server 2008 R2, Microsoft SQL Server 2008 and Informatica Ultra Messaging for its trading platforms.

Among stock exchanges, low latency is critical to competitive success. Direct Edge wanted to reduce the already low latency of its system while supporting vastly larger trading volumes. It accomplished those goals and more by rejecting Linux or UNIX and instead building its new exchange on technology from Microsoft and Informatica.

“When we put our stock exchange on the Microsoft platform, our No. 1 goal was to achieve latency low enough to compete against the biggest exchanges in the country,” said Steve Bonanno, chief technology officer, Direct Edge. “We built a real-time processing engine on Microsoft technology that published several hundred thousand transaction messages per second. At 340 microseconds, Windows delivered.”

“In building its business on a Microsoft platform, Direct Edge demonstrates the success of our continuing commitment to deliver a solid foundation for mission-critical operations in the financial services industry,” said Simon Witts, corporate vice president, Enterprise and Partner Group, Microsoft. “With the support and dedication of industry partners such as Informatica, Microsoft is pioneering a new paradigm for mission-critical workloads, providing dependability and flexibility to innovate the differentiated applications that are essential to achieving sustainable competitive advantage in today’s capital markets.”

Since implementation, Direct Edge’s market share has increased based in part on the large boost in transaction speeds and volumes and the high reliability of its new trading platform. With a market share of 9 percent to 11 percent of all trading volume in U.S. equities, Direct Edge trails the New York Stock Exchange (30 percent) and NASDAQ (20 percent), and is in a near tie for third place among U.S. stock exchanges. That milestone represented a rapid rise for the company, which had been founded just five years earlier as an electronic communications network and converted to a full-fledged stock exchange in summer 2010.

Faster Trading and More Reliable Service:

The exchange has already seen an increase in transaction volume from current customers, which it attributes to the reduced latency. To maintain that volume of business, Direct Edge had to offer its customers fast and reliable service. By deploying Windows Server 2008 R2, Microsoft SQL Server 2008 and Informatica Ultra Messaging, Direct Edge has reduced latency by 83 percent, to just 340 microseconds, enabling a 580 percent increase in throughput, and it envisions further cuts in latency. In addition to the sharp reduction in latency, Direct Edge has also achieved low variation in latency, which means customers and potential customers who are evaluating the new performance numbers can understand how likely they are to achieve the benchmark speeds in their own stock trades.

Direct Edge also chose Informatica Ultra Messaging to develop a peer-to-peer design for efficient communications between applications within the exchange platform. It also used the technology