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Objectives
Wouldn’t it be nice if there was a company offering a direct electronic connection between the Dutch AEX exchange in Amsterdam and any worldwide (Internet) Broker or Trading Professional. There will be. It will offer professional services to other professionals, so called business-to-business. The electronic communications is IP over satellite.
The statement of direction can be described as follows:
- Design, produce and maintain direct software interfaces between the platform of non-member foreign Internet brokers (IB’s) and Professional Traders and the share-trading system of the Euronext.
- Provide secured low-cost communications between the foreign IB’s and the Euronext and monitor the day-to-day electronic operations.
- Include financial and settlement services to the non-member foreign (Internet) broker via a clearing & settlement member bank in a combined offering.
A clear objective of the project is to prove that order execution speed is not related to high cost. This could open up a whole new market for small investors executing their orders in the Security home market or for Professionals to lower their trading costs while increasing their trading volume.
Challenges
Plan
The Jupiter project consists of 3 phases.
Phase 1 (June 2000-September 2000):
- Perform testing to find optimal designs.
- Study changes to the infrastructure to meet the latest customer requirements and optimise price / performance.
- BDR: beginning September 2000.
Phase 2 (September 2000-February 2001):
- Purchase and installation of computer and communication equipment.
- Coding and testing of software and additional functional design.
- Connection of first non-member broker to Euronext using bi-directional satellite communications.
- MTR: mid to end February 2001.
Phase 3 (February 2001-April 2001):
- Bug fixing and additional coding of software.
- Preparation of documentation. Evaluation of user feedback.
- Connection of four other brokers to the pilot system to ensure all situations are reviewed before opening Jupiter to the market.
- FR: mid April 2001.
Current Status
With the Final Review held on 14th February 2002 the Jupiter project has formally, and successfully, been finalized.
The system performs according to expectation and during the Final Review the working of Jupiter has been demonstrated. A new order takes just over 2 seconds from New York to Amsterdam, getting executed in Paris and sending back the results to New York, well within the design limits. Distance is no limiting factor anymore. The clearing bank gets an automated trade execution message from the Exchange and recalculates the trader’s new position as well as performs the administrative handling to settle the trade immediately. No manual interference is necessary anymore, limiting the risk of mistakes.
The project has been very innovative, both in a business sense, as from a technical point of view and it required a long breath to take Jupiter to its finalization. During the development the market environment changed. The AEX merged into Euronext and the attack on the World Trade Center had its impact. From a technical perspective it became apparent that an innovative system for the specific environment of stock exchanges required in-depth knowledge and flexibility from the design team, and also here the learning curve was experienced.
The Jupiter project has been a true pilot project, innovative and challenging and we are proud of the achievements. The system is now operational, and we are grateful to all participants who have supported us in reaching this goal!