The Philippine Stock Exchange Doubles Transactions with Red Hat Enterprise Linux

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July 25, 2011

Customer: The Philippine Stock Exchange, Inc

“We are extremely impressed with the performance of the solutions. Our transaction volume has doubled since we implemented the new Red Hat solution and we encountered no degradation with the system performance.” – Tristan G. Gillego, officer-in-charge, Technology Division, PSE

Geography: APAC
Country: Philippines


Business Challenge:

Legacy trading system could not handle business growth

Software:

Red Hat Enterprise Linux 4.5 and Red Hat Enterprise Linux 5

Hardware:

HP Xeon-based server

Benefits:

Red Hat Enterprise Linux is secure, scalable, and reliable enough to handle more than twice the capacity of the existing trading system, giving The Philippine Stock Exchange, Inc. (PSE) the platform to introduce and offer more investment products such as derivatives and options in the future.

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Background:

The PSE owns and operates the only stock exchange in the region. Incorporated in 1992 following the merger of the Manila Stock Exchange and the Makati Stock Exchange, the PSE was granted self-regulatory organization status by The Securities and Exchange Commission in 1998. After going public in 2003, the PSE has grown significantly. As of May 2011, the organization has 249 listed firms with a combined market capitalization of US $206 billion, and 134 active trading participants.

Business Challenge:

As business demand evolved, the legacy system in use since 1994 was no longer able to support business growth in terms of number of transactions and products offered to investors. Both the hardware and software of the trading system, which was running on the Digital Open/VMS platform, reached their end of life and support, thus becoming obsolete. The PSE also encountered numerous problems due to the limitations of the system, and its vendor and staff were unable to provide adequate support. Furthermore, the introduction of new products with different trading behavior would require system enhancement, and it usually will take more than half a year to customize the system. This makes it difficult for the Exchange to market new products timely.

To expand its business opportunities, the Exchange also planned to offer additional products to reach out to a wider customer base. The old system did not have the ability to scale with this planned growth nor cope with the potential increase in transactions.

The critical nature and impact of the trading system on business prompted the search for a more robust and reliable replacement.

Solution:

The PSE engaged the services of technology vendor, NYSE Technologies SAS, (NYSET), to propose and recommend a platform and other third party software for the replacement of the existing trading system. The criteria posed by the PSE included performance, scalability, reliability, and cost of implementation.

“Based on our specifications, Red Hat was the only product specifically recommended by the vendor for our new system given our set of criteria,” said Tristan G. Gillego, officer in charge, Technology Division, PSE. After careful consideration, the decision was made to begin a partnership with Red Hat. Red Hat Enterprise Linux 4.5 and 5 were selected as the platform for the new trading system, which also included Intel Xeon-based HP servers, Oracle 10g Database and NSC v900, the trading system application provided by NYSET.

After careful consideration, the decision was made to begin a partnership with Red Hat. Red Hat Enterprise Linux 4.5 and 5 were selected as the platform for the new trading system, which also included Intel Xeon-based HP servers, Oracle 10g Database and NSC v900, the trading system application provided by NYSET.

Benefits:

The new system, now called PSEtrade went live on July 26, 2010. The PSE has reaped immediate benefits such as scalability, greater reliability, and the ability to handle more transactions, giving the Exchange the foundation for product portfolio expansion.

“Red Hat is easy to deploy, install and manage. We are really impressed with the performance of the solutions. Our transaction volume has doubled since the partnership started. The solutions offered has directly impacted our ability to increase customer satisfaction. This augurs well for us as we foresee strong growth in online trading,” said Gillego. After the initial month of launch, the system has performed flawlessly, with no unplanned downtime. “The entire system is reliable and our maintenance cost has dropped by 30 percent,” said Gillego. Gillego firmly believes that Red Hat has given the PSE the competitive edge. “Red Hat is based on open source, which makes support readily available. The software is cost effective and not vulnerable to virus attacks,” added Gillego.

With the successful launch of PSEtrade, the PSE plans to migrate other systems and applications to the Red Hat platform and standardize their usage across the organization and its subsidiaries. It also intends to use other Red Hat products for back office applications that will support the day-to-day operations of the various divisions of the Exchange.

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