InformationWeek

November 24, 1997

Nasdaq Outsources

Signs deal with MCI to upgrade capacity into next century

he Nasdaq Stock Market Inc. last week signed a six-year, $600 million contract with MCI in an effort to double its speed and trading capacity to prepare for the next millennium. It's the telecom's largest commercial outsourcing contract.

The upgrade comes just in time. On Oct. 28, Nasdaq traded a record 1.37 billion shares, close to its capacity of 1.5 billion shares a day. By mid-1998, Nasdaq will increase the capacity of the current network-already run by MCI-to 2 billion shares. By 2000, MCI will implement a new network that will initially be able to handle 4 billion shares a day-upgradable to 8 billion a day.

Nasdaq made the decision to upgrade this summer, before the record October day. "Our market can't just prepare for an average day," says Frank Zarb, Nasdaq chairman and CEO and president of the National Association of Securities Dealers Inc. in Washington. "It has to prepare for the extreme in extreme days."

Brokers will be connected to the network via dual T1 1.54 Mbps lines. The brokers won't use all the capacity on the lines initially. For example, in 2000, brokers will connect at 128 Kbps, with the speeds doubling as needed.

The network will rely on Cisco Systems 7500 and 3600 routers, plus Catalyst 5000 high-end LAN switches. At the center of the network are 22 intelligent nodes that are backed up by a live component and a redundant component on standby. The nodes promise to deliver information to every end user simultaneously.

"There's a level playing field," says Martin Heikel, the MCI executive responsible for the Nasdaq network. "A bro ker in New York doesn't get information a half-second sooner than one in California or London."

Nasdaq's network is run by Digital Equipment network-management systems from three locations, including centers in Trumbull, Conn., and Rockville, Md.

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