London Stock Exchange traders are demanding to know exactly what
went wrong this week when the exchange's Tradelect
core trading platform was unable to complete trading on what
was potentially the busiest trading day of the year.
Because of the system problem, traders were unable to complete
trades from 9.15am to 4pm on Monday.
Speculation in the financial markets about what went wrong is
causing uncertainty among companies that rely heavily on the
exchange.
Two sets of events have been linked with the failure.
First, he glitch came early on a day expected to be a busy one
following the US government's decision to bail out mortgage lenders
Fannie Mae and Freddie Mac.
Second, David Lester, CIO at the LSE,
told Computer Weekly in May that major upgrades to Tradelect were
due about now.
Lester said that the number of messages processed by
Tradelect would double to 10,000 in September after the
completion of the integration of Milan-based Borsa Italiana, which
LSE acquired last year for £1.63bn. The exchange also plans to
halve the time taken to complete a trade to three milliseconds by
the end of October, doubling volumes again.
Jon Cosson, head of IT at stockbroker JM Finn, said his firm
could only trade on foreign markets on Monday. "The London Stock
Exchange is a critical resource and we cannot do our fundamental
work without it.
"They need to come clean because by keeping quiet they are
creating speculation and playing into the hands of their
competitors."
Cosson added that while the London Stock Exchange was a very
important company it was no longer a "closed shop", with new
competitors springing up following the introduction of the
Markets in Financial Instruments Directive (MiFID), which
liberalised the market by removing the rule that all trades had to
go through local exchanges.
Towergroup analyst Bob McDowall said the incident was "very
damaging to the LSE reputation and to London as a financial centre
for trading equities".
He said the LSE should provide a full non-technical but detailed
explanation of the reason for this interruption to all its
stakeholders.
The stock exchange has said it has fixed the software problem it
blamed for preventing Tradelect from completing trades on
Monday.
But it dismissed speculation that the high trade volumes or the
integration of Borsa Italiana business were to blame.
"It was software-related, but it was not the result of high
volumes or the integration of Borsa Italiana," said a spokeswoman.
"We have put in a software enhancement and are confident this will
not happen again."
The spokeswoman did not give precise details of the cause of the
problems but said it was the result of "a combination of technical
processes occurring at the same time."
The stock exchange infrastructure is mirrored and backed up.
"The LSE is saying there was no way of rolling back to the
previous day's setup, so there must have been a critical
application failure, said
Chris Skinner, CEO at
financial services think-tank Balatro.
Tradelect platform pays dividends for LSE >>