The role of chief technology officer (CTO) in a world-class organisation is testing enough, but Robin Paine’s position at the London Stock Exchange presents a particular set of challenges.

The organisation has a reputation of service excellence – no IT outages within its core technology for more than six years. As well as maintaining that record during his tenure, Paine is heading a major transformation project that will see an extensive overhaul of LSE’s IT infrastructure.

‘I have to maintain a history of absolute world-class availability while at the same time planning for and implementing an enormous technology change,’ says Paine.

‘There is a huge focus on testing and re-testing which means integration and regression testing as well as every other type of testing you can think of. It is a very rigorous process of change control to make sure the new does not disrupt the existing.’

Paine became CTO 18 months ago and has seen a lot of change in terms of both the corporate and technology structure of the organisation.

His career path from graduate of computer engineering to CTO at one of the most important exchanges in the world included stints at some of the biggest names in London’s financial centre, such as Morgan Stanley, UBS, ABN Amro, as well as experience at EDS supplying services.

Paine’s role encompasses two areas: the day-to-day execution and running of the technology infrastructure and delivery of a major technology roadmap of which LSE is in its fourth and final year.

‘The transformation project involves changing all our technology, everything from the desktop to the trading system,’ says Paine.

LSE has already reached a number of significant milestones in its roadmap.

The transformation project has 10 clear objectives that include reducing cost of ownership, increasing software agility, providing the ability to support different asset classes, currencies and time zones and improving performance.

Paine regards the current transformation as the third wave of technology changes since the implementation of digital markets 20 years ago.

‘We are using commodity hardware technology, HP servers, running on Cisco networks, running the Windows operating systems with all applications developed in C#.net, so we are using current and advanced technologies to build our mission-critical applications,’ he says.

According to Paine, the most significant of the projects so far was in September last year when LSE launched Infolect, an information distribution system for trade pricing information.

‘You can see the business benefits of our transformation project after the implementation of Infolect; the performance is 15 times faster than the old technology and there is a massive volume increase as a direct result,’ he says.

Paine believes the introduction of Infolect was one of the biggest successes of the technology roadmap, demonstrated by an increase in transaction volumes of 56 per cent.

‘The speed at which we process and send out trade prices to our network has improved from 30 milliseconds to just two milliseconds,’ says Paine.

The next major milestone in the technology roadmap will be the replacement of LSE’s core trading system with TradeElect in August 2007. TradeElect will be about 10 times faster than the current trading system, with a target end-to-end speed of 10 milliseconds.

‘We have already launched TradeElect for market testing so individuals can make software changes at their end, the whole city should be programming to this specification and testing right now,’ says Paine.

LSE will give its 3,500 member firms a pass or a fail following a mandatory conformance process which started in November last year.

‘The go-live date is dependent on how quickly member firms can get through their testing process,’ says Paine. ‘We are ready to go our end and we are doing all we can to create a buzz in the city about this huge technology change.’

For Paine, the biggest challenge is getting software vendors and member firms through the testing period – although he says all is going well so far.

The TradeElect platform will allow Paine and his team to deliver more readily on requests that require software agility.

One example is the adoption of the Fix standard for connectivity, an industry standard for financial information communication, for which LSE is at the client consultation stage.

Paine’s role is not just about strategic transformation, however. The CTO also manages the day-to-day technology activities of the LSE, which are carried out by a team of about 300 employees that include in-house and outsourced staff.

A large amount of the organisation’s IT activity, both operational and special projects, are outsourced to firms including Accenture, HP, and Microsoft. One of Paine’s primary concerns in his role as CTO is reliability, so backup, storage and retrieval of data are of utmost importance.

‘We send out more than 20 million price updates every day and we have a recorded history of that over the last 10 years, so it is quite a demanding job, retaining that volume of data and providing relatively responsive access to that information,’ he says.

‘The big issue we have is that people do not just want super fast systems, they also want super reliable systems – so all the data needs to be replicated in more than one place.’

The LSE has two separate data centres that each complete all transactions.

‘But before we communicate a price out to the market they have to be cross-checked with the backup system in our alternate data centre,’ he says. ‘So we have to move those prices from one data centre to another before we go out to the market with them.’

Though Paine enjoys the day-to-day running of a world-class IT operation, what attracted him to working at a stock exchange is the correlation between t echnology and the business challenges of revenue diversification and revenue growth.

‘Infolect is the perfect example, you put in a piece of brand new, next-generation technology and it helps you reduce your costs, but perhaps more importantly it accelerates revenue growth,’ says Paine.

And it is that correlation between being able to deliver a technology and seeing it make a difference to the business why Paine loves his role as CTO.

‘It keeps me really interested – my role cannot then be focused entirely on the technology and has to leverage our technology investment to enhance the business,’ says Paine.

The increasingly competitive nature of LSE’s business has never before demanded so much of its technology function, and is becoming what Paine describes as an arms race for speed between different exchanges.

‘There are alternative execution venues which creates huge competition for producing the fastest trading system,’ says Paine.

The London financial market is 40 per cent fully digital, a figure that Paine believes will continue to grow – although he says it is impossible to predict how long this growth period will last.

‘There is a huge proliferation of digital devices, and we think they are really in their first generation and they will evolve much more over the next decade, with huge capital expenditure going into development,’ says Paine.

‘The laws of physics do get in the way at a certain point, but I think there is some way to go before we bump into the speed of light issues. So the race is on and there will be an end point, but we are not there yet.’

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Further reading:

LSE sharpens trading practices

London and Tokyo exchange assets