Mainframes still rule on Wall Street

Big iron isn't dead yet -- at least not on Wall Street.

Indeed, mainframe computers will continue to perform key processing functions such as clearing and settling trades for major stock exchanges and back-end trade processing organizations in the securities industry for at least another decade, according to a new report released by Meridien Research.

For mission-critical functions such as trade processing, there's still no substitute for the speed and capacity that mainframes can deliver, said Dana Stiffler, an analyst at Meridien Research and author of the report.

In fact, because of growing stock market volumes, many firms continue to add to their mainframe's MIPS.

For instance, The Depository Trust & Clearing Corp., which provides the primary infrastructure for the clearing and settlement of the majority of the equity, corporate debt and bond transactions in the US, added a few machines last year and is planning to do so again this year, according to Steve Letzler, a spokesman for the New York-based outfit.

At the start of 2000, the Depository Trust had enough computing power in its IBM G6 mainframes to handle up to 25 million transactions a day. By the end of last year, the company had added enough processors to handle 40 million transactions per day.

"By the end of 2001 we'll have that up to 60 million transactions a day" to handle growing volumes, Letzler said. "With full redundancy -- so we have duplicate sets."

Although the highest volume the Depository Trust has recorded in a single day was 19 million transactions, the company performs a critical function -- clearing and settling the lion's share of stock transactions for US brokerages and other securities firms. "We have to be prepared to handle whatever the markets give us," Letzler said.

In addition to higher volumes, the market is also demanding faster execution.

Originally, the processing was performed in batches at the end of each trading day. Over this past year, the Depository Trust moved to a multibatch processing format and expects to have a real-time process in place by year's end, he added. This transition is part of the securities industry's move from a three-day to a one-day settlement cycle (T+1), due to be completed in 2004.

The same demands are also being faced by the stock exchanges.

"We're always adding more mainframes for purposes of enhancing capacity," said Steve Randich, chief technology officer at The Nasdaq Stock Market. Nasdaq uses Unisys mainframes for its quotation system, which puts the prices available out to the market, and a Tandem S7400, the biggest Tandem machine available, for its order negotiation, execution and trade reporting systems, said Randich.

In fact, Nasdaq is reaching the limits of what these machines can handle, he said.

"We're limited in our ability to continue to vertically expand our capacity," he said. "Therein lies the need to develop distributed architectures so we can more easily scale across multiple machines."

Nonetheless, there's still a demand among Wall Street firms for client/server applications, often in ancillary systems such as reporting and order-taking programs.

"Things that used to be handled by paper-based communications can be put on a distributed network," said Meridien's Stiffler.

For its part, the Depository Trust uses Sun servers to allow market participants to enter corrections or individual transactions over the Web, Letzler said.

He added that the company is expanding its use of these systems "because it provides greater access to our services over the Internet," he said.

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