By ANNA EWING
Executive Vice President, Chief Information Officer
NASDAQ OMX

Exchange executives would likely describe their organizations as marketplaces where buyers and sellers meet, discover prices and trade securities. Today one can argue that exchanges could be described as technology companies. As such, we are measured by our capacity for innovation, and a significant part of our success directly correlates with our ability to process large transaction volumes at lightning speed under extreme conditions.

Global markets are defined by increasing volume, complexity and interconnectedness. Against that backdrop we focus on evolving our technology to meet and stay ahead of the demand created by those trends. For example, maintaining the ability of our markets to thrive under extreme conditions is a daily concern. Since exchanges are part of a nation’s critical infrastructure, a market’s resilience is both a business imperative and a public responsibility.

Technology played a critical role in the smooth functioning of the markets during the height of the market crisis. Under extraordinary conditions, NASDAQ OMX markets successfully handled transaction volumes that previously had only been tested in the lab.  

Continuous innovation to improve latency and throughput is also key to an exchange’s success. Since the fall of 2008, throughput at The NASDAQ Stock Market has doubled to nearly 500,000 transactions/second, and will double again by the end of 2009, while further reducing latency. Market data feeds and timestamps are now being disseminated in nanoseconds. From a speed perspective, it is a race to zero.

Technological innovation also drives business success. Technology enabled offerings, based on market data for example, can improve transparency, deepen customer relationships and bring in new revenue. Technology also drives business solutions that, for example, can help listed companies know more about their potential investors.  

The events of last year have reinforced the need to monitor and measure liquidity and counterparty risk in real time – an impossible feat without having the right systems in place.

Around the world NASDAQ OMX helps exchanges use technology to transform their markets. The Iraq Stock Exchange, for example, has moved from posting prices on a chalkboard to functioning as a modern, transparent, electronic trading venue. Trading and clearing of energy derivatives has been introduced in India. A new fixed income and derivatives trading platform in Colombia has led to significant growth.  

All this is good news for the exchange industry and the global economy. Technology is integral to the growth of a nation’s economy, and efficient and growth-oriented economies require well-functioning financial markets. Our work shows that technology has the power to transform markets and the economies they serve.