London Stock Exchange's new trading platform will need to be overhauled after it is installed because it is not scalable enough to cope with the rapidly-expanding market, OM Group has claimed.
With the deadline for OM Group's hostile offer for the London Stock Exchange (LSE) due to expire at the end of this week, the technological merits of the two trading platforms have taken centre stage in a bitter and protracted battle for the future of the exchange.
Last month LSE urged OM Group to drop its hostile bid after the Swedish technology supplier admitted it only had acceptance from less than 3% of LSE shareholders.
LSE told member firms the planned upgrade of its trading system Sets - based on Tandem hardware - will be able to handle double the number of transactions.
But OM Group warned LSE firms that the Sets upgrade, due next year, will not be able to double its volume again unless the system's software is re-engineered. The cost could be passed on to the users, it pointed out.
Martin Coen, OM's head of portfolio management, said, "We believe that [LSE's] application is probably at its limit at this time [after the upgrade] so it can't double it again without re-engineering the software."
LSE is also committed to allowing the large private investment community to trade directly on the exchange. This would push the Sets trading system beyond its capacity to cope, particularly during intensive trading, OM claimed.
An LSE spokesman insisted that Sets was flexible but refused to comment in detail on OM's allegations.