Think of Wall Street, the Hang Seng, or the FTSE and most people picture clanging bells and frantic dealing down in the trading pits.
But the fastest-growing major stock market in the world, the Nasdaq, has no trading floor. Or to be more precise, it has more than 500 virtual trading floors - each one a self-contained electronic forum run by a single dealer known as a market-maker, who can be based anywhere. Market-makers are Nasdaq-approved professionals who use their own capital to buy and sell quotes on the system. More than 7,000 traders link to the market-makers.
Appropriately enough for the stock market, whose vigorous growth is a direct result of it being the market of choice for technology companies, the Nasdaq needs no trading floor because it is entirely computer driven. This means it matters little where the market is located. Although the Nasdaq's official mailing address and main decision makers are in Washington DC, the computerised exchange itself - a whimsical, contemporary glass and steel architectural statement somewhat at odds with the conservative image of moneymen and women - is based in a bland industrial park in Turnbull, Connecticut, two hours away from the bustle of Wall Street.
Standing in the middle of the Nasdaq's silicon heart its data centre packed with $50 million (£33.8 million) worth of computer software and hardware chief technology officer and vice-president, Mr John Hickey, is dwarfed by stacks of blinking monitors. On one side, on a wall-length ticker nearly two feet high, a stream of Nasdaq-listed companies and their current quotes races past.
Its trademark ticker system displays company logos rather than their market abbreviations, and the technology stocks are easy to spot - Dell, Microsoft, Oracle, Intel, Sybase, 3Com. . . Then, incongruously, Starbucks Coffee.
"We drive the marketplace through these consoles here," he says, gesturing towards a cluster of machines. In a neighbouring, spotlessly white room, stand rows of server towers, looking like a small city of white and beige skyscrapers.
The Nasdaq may lack the New York Stock Exchange's start-up bells but at market opening - 9:30 a.m. US Eastern Standard Time - the consoles stage their own quieter computerised drama. In the seconds before 9.30 a.m, the system idles at about 10 per cent of capacity - Tandem computers for the actual execution of trades, and top-of-the-line Unisys servers run the entire show.
But the instant the market opens, bar graphs on one computer skyrocket up from the bottom of the screen, going from white into flashing red, as the system is slammed with millions of simultaneous bids, offers and sales. For half an hour, Mr Hickey says, the system turns at 90 per cent of capacity before the opening peak subsides.
That represents more than five million trades a minute, with an average daily volume during the 390-minute trading day of 780 million trades.
Spikes in the market when the Nasdaq climbed last week pushed the system to just short of a billion trades. Conversely, on the Nasdaq's busiest day when the market plummeted and trades topped 1.375 billion, some damage was caused to the Unisys servers. These were repaired the same day, but the glitch illustrates why the Nasdaq is always in the midst of some type of technology upgrade.
As if such glitches weren't enough to contend with, there was the infamous squirrel incident in 1994. "This is a legend I'll live with forever, this damn squirrel," sighs Mr Hickey. "We do a million things right day in and day out but everyone always remembers the one time things went wrong." Alas, a squirrel "fried itself in a transformer" at one of the local electricity sub-stations in Turnbull, and for some reason the Nasdaq's nearly iron-clad protection system failed to switch the exchange over to its back-up power system, bringing trading to a halt.
The exchange was under tight scrutiny from federal regulators for months afterwards, not surprising when one considers that markets such as Nasdaq and the NYSE are vital cogs in the global economy. The Nasdaq's 26,000-square feet data centre is ranked second only to hospitals in priority for receiving emergency fuel to run its back up diesel-powered generators.
Indeed, the Nasdaq must have one of the most elaborate emergency back-up systems in the world. "We have what we call N plus two reliability. The system has a back-up system, and the back-up has a back-up," Mr Hickey says. That means back-ups not only to power the hundreds of processors executing trades deep within the Nasdaq's computers, but just as importantly, the cooling system that keep those computers from overheating. Without the cold air circulating in the three-feet space which also holds the thousands of miles of copper and fibreoptic cable snaking beneath each of the building's three floors, the computers could not run more than six or seven minutes before suffering a shutdown.
The Nasdaq's physical plant is a $35 billion guarantee that capitalism, in the form of the activities of the marketmakers, will survive even a double power outage and the breakdown of two cooling pumps, two cooling towers and two diesel electric generators. An engineer down in a windowless basement office makes sure switches are thrown as necessary and back-up systems fire up as required. He even carries a pager so that a computer can beep him if there are problems, which he can then solve from computer terminals in the office or from home.
If the electricity, which comes into the Nasdaq from two separate power stations located in opposite ends of Turnbull, goes completely, one of the diesel engines in the basement will automatically come on. If one fails, another will switch on, and if that fails, a third will start.
The same happens in the case of a cooling pump failure - two more fully operational pumps are primed to take over, one after the other. If needed, the entire system is designed to transfer seamlessly from one power source to another by a room in which 66 tons of batteries reside (and of course, there's a back-up 66 tons in another room with a third room in train). If necessary, the batteries alone can run all of the Nasdaq's systems for 15 minutes during a power system changeover.
Back in the data centre, the computers are being prepared for one of an average of 34 annual systems changes. Mr Hickey says this one is particularly sensitive because all of the Nasdaq's 7,000 traders are being upgraded from the 56 kilobytes-per-second modems which they currently use to connect to the Nasdaq's private network (the largest in the world, according to Intel) onto dual T1 lines - high-speed data lines capable of transferring 1.55 megabits of data a second. "It's a difficult rollout because it's a hot switch" - a changeover while the system is live - "and it makes the traders very, very nervous," he says.
Such upgrades will make the Nasdaq capable of two billion trades a day in the new year, Mr Hickey says. Given the market's swift growth, he expects to need that capacity sooner rather than later. New Unisys 16-processor servers will increase that capacity again, once they're available in late 2000.
In the future, the Nasdaq intends to put its system on the Internet, part of the technological future of the world's stock exchanges which promise to revolutionise the way in which markets function. In essence this will transform anyone at the end of a computer into a potential trader.
