LSE ACQUISITION OF LANKA BASED MILLENIUMIT MEANS INDIAN SUBCONTINENT IS FLEXING MUSCLES WITH EUROPE SAYS FINANCIAL TIMES
Posted on September 17th, 2009

By Walter Jayawardhana

The London Stock Exchange (LSE) acquisition of the Sri Lanka based MilleniumIT, a company founded by Tony Weerasinghe is a sign that technology groups in the Indian subcontinent are flexing muscles globally, winning business from under the noses of better-known companies in Europe said Financial Times.

Writer Jeremy Grant in the financial journal said , the acquisition by the LSE “marks a major milestone for MillenniumIT, which started with 12 employees under Weeresinghe and has often struggled to convince prospective customers that it can compete with well-established rivals.”

Another commentator said,” London Stock Exchange Group Plc increased 3.0% to 833 pence after it turned to the Indian subcontinent to help reduce its huge technology costs. LSE acquired Sri Lanka based MillenniumIT for $30 million (£18 million) that the exchange hopes will help it fend off nimbler rivals.”

The Financial Times further said, “When the world’s biggest exchanges go hunting for tech-savvy companies to help upgrade their trading systems, the last place they tend to look is Sri Lanka, a country known more for the civil war that has ravaged it for more than two decades.

“But that is where the London Stock Exchange yesterday made a $30m commitment, snapping up a little-known – but rapidly growing – company called MillenniumIT.

“The company was founded by Tony Weeresinghe, a former country manager for US software company Oracle, in 1996. It employs a staff of 450, most on a 6.5 hectare campus outside Colombo, the Sri Lankan capital, complete with tennis court and gymnasium.

“MillenniumIT specialises in developing and selling the kind of ultra-fast trading systems that exchanges increasingly need to attract the “high-frequency” traders that are proving an ever-larger share of orders to exchanges.

“The LSE’s purchase is a sign that technology groups in the Indian subcontinent are flexing muscles globally, winning business from under the noses of better-known companies in Europe.

“In India, Mumbai-based Financial Technologies has muscled its way into the mainstream world of exchange technology by building systems for local exchanges in India and expanding into the Gulf and elsewhere in Asia.

“But it also marks a major milestone for MillenniumIT, which started with 12 employees under Weeresinghe and has often struggled to convince prospective customers that it can compete with well-established rivals.

“MillenniumIT’s first contract was to provide the Colombo Stock Exchange with a new depository and clearing system, paid for by funds provided by the US government.

“Contracts followed for other developing market exchanges in Kenya and Tanzania. In 2001 Weeresinghe was on holiday in Boston when he got wind of a tender that the Boston Stock Exchange had put out for the upgrade of the exchange’s trading system.

“He managed to get a meeting with the executive in charge of the tender. “The first question was “ƒ”¹…”where is Sri Lanka?’,” the soft-spoken Weeresinghe recalls, sitting in an empty office that the LSE has already provided for him.

“Even after Weeresinghe had persuaded the Boston exchange to put his company on a shortlist of two for the job, the Americans still doubted the Sri Lankan company’s commitment to the job, given how far away it was based.

“Weeresinghe decided to move to Boston to demonstrate his commitment – and the company won the contract. He still lives there with his family but admits his company’s location has sometimes been an obstacle: “Probably being a Sri Lankan company cost us a few deals as well,” he says.

“There have been other obstacles. The company received some venture capital backing in 1999. But the company’s small size – relative to rivals in more mature markets – would often lead prospective customers to question whether it would survive long enough to complete any contract it might win.

“I have faced the situation many times where we have been the chosen partners for technology and the [customer’s] board has shut it down and said “ƒ”¹…”we don’t want to put all our eggs in this basket when we don’t know the company’s future’,” Weeresinghe says. Yesterday’s deal showed that, as far as the LSE is concerned, those days are over.

“It is also a vote of confidence in MillenniumIT’s technology, which has yet to be proven on a wide scale. Its only other big customer was the American Stock Exchange, now part of NYSE Euronext.

“The attraction for the LSE is technology that MillenniumIT has developed that would increase the number of electronic orders that come in to the LSE.

“Currently its TradElect system can handle 20,000 messages per second; the Sri Lankan company claims its technology can handle over 1m.

“David Lester, LSE chief information officer, says: “If you think of the expense we have with external software providers and you compare that with Sri Lanka, it’s a huge cost saving. There is also the intellectual software we get.”

Another report said, “MillenniumIT chief Tony Weerasinghe will report directly to London Stock Exchange chief Xavier Rolet.

“LSE hopes to save £10 million a year through the acquisition.

“Borse Dubai and Qatar Investment Authority control 35% of LSE and only ten years ago Dubai based stock exchange will not entertain hiring MillenniumIT to modernize their operations.

“Since then MillenniumIT built its reputation by providing programming services to exchanges in the U.S. and selling its various high performance low cost trading trading applications to exchanges in Asia and Africa.

“The deal has already received approval from 90% of shareholders and is expected to be completed by mid-October.

“The acquisition will solve two problems faced by LSE. The exchange has been a consistent laggard as new rivals pop with better and faster tools to complete and process rapid fire trades and provide trained staff that will serve as in-house outsourcing partner.

“Applications developed by MillenniumIT may be useful to various exchanges including Milan Exchange and Johannesburg Stock Exchange and meet the needs of active traders in London.

“MillenniumIT operates a large technology campus near Colombo, Sri Lanka and has offices In Boston and New Jersey.”

One Response to “LSE ACQUISITION OF LANKA BASED MILLENIUMIT MEANS INDIAN SUBCONTINENT IS FLEXING MUSCLES WITH EUROPE SAYS FINANCIAL TIMES”

  1. Ram2009 Says:

    If the software of this company was anywhere as good as was claimed, then my belief is that it should been far more valuable that what it was sold for. It should also not have been sold, but licensed to various stock exchanges.

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