Success story - OpenVMS Systems - HP

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.”
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“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
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.
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.
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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
For more information on how working with HP can benefit you, contact your
local HP service representative or visit us at www.hp.com
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© 2003 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change
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