Four years ago the Toronto Stock Exchange was suffering from a shaky IT system and bad press. A series of crashes over the years left investors and brokers frustrated and raised serious questions about the stability of the stock exchange’s aging technology systems.
Today, the TSX is not only functioning
with greater reliability, but it has packaged its technology makeover as an offering to medium-size enterprises in the financial services sector.
“”Those challenges… were certainly the catalyst for change at the Exchange,”” says Harry McLean, vice-president of operations and service delivery at the TSX, referring to the much-publicized crashes that crippled the exchange for what were sometimes brief, but painful periods of time during trading: as many as six times since 1989, including an episode in June 2000 that halted trading for four hours on Nortel Networks and at least four other instances of interruption.
That year, the TSX launched an makeover of its then quarter-century-old Computer Assisted Trading System (CATS).
“”The priority was to overhaul the technology that was in place and resolve those issues around availability and reliability of the technology that supports the capital markets of Canada,”” says McLean.
Over the last two and a half years there have been numerous changes that have taken place in the organization.
It started with the roll out of a new trading engine and followed with a network overhaul.
Looking at the problem from ground zero, McLean says there were two critical starting points to consider when the revamp began: Build the team and change the technology.
“”One was the technology itself, and while the TSE was very innovative and had the CAT system — which I think 25 years ago was the first electronic trading system to go live — it was 25-year old technology,”” he says. The technology was one aspect, but the organization itself was also a not -for-profit organization. “”Where we wanted to get to was a publicly owned, for profit business, and you can appreciate there is quite a diversity in terms of the skills and experiences required to get us from A to B.””
The organization would even-tually create TSX Technologies, the body responsible for powering the Exchange.
“”We’ve built up the team over that time, who were capable of overhauling not just the existing technology, but also folks who are well experienced in delivering outsourcing services to the small and medium size enterprises,”” says McLean.
It is now a profit centre, not just a core group maintaining the Exchange on a daily basis. TSX Technologies also serves as a provider of disaster recovery planning to companies such as Mississauga-Ont.-based Financial Models Corp. (FMC). — a provider of software to the financial services industry.
TSX Technologies also recently acted as advisor to the Shanghai Stock Exchange when it was considering a new trading platform.
“”The way we are viewing ourselves is as 150-year-old start-up,”” says McLean, a former executive with IBM Global Services.
McLean says the IT staff at the TSX is no longer ‘fighting the fires on a day-to-day basis’ that you would have seen a few years ago.
TSX Technologies now sells managed services and application services to external clients. Customers can contract for disaster recovery services and a range of managed services.
Since its entry into the market earlier this year, the company has acquired a handful of customers that are taking advantage of services, including help desk and technical and application support services. For FMC, the company was looking to update its disaster recovery plan when it discovered the TSX was in the game, says vice-president of operations Claude Johnston. A global provider of investment management software services providing tools for investment managers to run their business, FMC has 500 clients worldwide, including investment managers, private banks and pension fund sponsors. While it had a cold site with taped back up located in Wooddale, Ill. for years, FMC wanted a disaster recovery site closer to home.
FMC’s director of information technology, Matthew Moffat, interviewed vendors, including TSX Technologies — but only when he stumbled on it by accident. “”We actually found out through one of our executive VPs who was having some meetings at the TSX over other business and they mentioned they were getting in this business and we visited both their sites — downtown and in Markham.””
FMC had already sent out RFPs and had been in talks with at least four vendors, including IBM and Fusepoint and had a few meetings with Q9 Networks.
The factors that led Moffat and Johnston to choose TSX included price and the fact they have two sites connected with dark fibre. “”We also felt they had the experience and that we have something in common. As well, the team that built it for TSX is the team that will provide the service to us. So that raised our level of confidence.””
IDC’s director of outsourcing and IT utility research, Dan McLean, says while most companies would be inclined to look at the bigger centres like Fusepoint and Q9 instead of a smaller firm like TSX Technologies, often it comes down to the “”gut feeling”” of those doing the shopping around. “”The fact (the TSX) is a smaller shop, I would have thought would have worked against them,”” says McLean. “”But what we’re seeing with some niche companies in this space is that some of them are emerging as specialists in various vertical industries.””
Once successful in the Greater Toronto Area, TSX Technololgies has its sights set on expanding the operation’s offerings to Vancouver, Calgary and Montreal.