Last Wednesday, one of the largest financial exchanges in the world stopped trading for nearly eight hours because the system providing real-time prices to share dealers was unavailable as a result of a technical failure. Andersen Consulting, which runs the system, launched an immediate investigation in conjunction with internal stock exchange staff.
A stock exchange spokesman would not comment on whether it had options to use other suppliers should the problems with the system continue. "There is no question of shopping around at the moment," he said. "We are working with Andersen to make sure the stock exchange keeps going. We are not at the point of reviewing anything and are making use of the systems and resources we have in place."
"This particular fault will not happen again - we know what happened, we just don't know why it happened."
The Financial Services Authority, which is responsible for protecting investors and ensuring the stability of the market, immediately launched an investigation into the "whole issue" of the breakdown, including lines of accountability.
The FSA said it would publish its findings but could not say when.
The problem occurred when a component in the system that runs the London Market Information Link failed in the early hours of 5 April.
Although the difficulty was short-lived, it meant that two systems running sequentially became out of step, corrupting vital share data. The entire system had to be brought down and rebooted.
The system did not come online until 3.45pm on Wednesday afternoon and the stock exchange was kept open for an extra two hours until 6.30pm so that more trading could be completed. Trading should have been heavy on that day because it was the last day of the tax year and investors were attempting to reduce capital gains tax bills.
The last comparable outage at the Stock Exchange came on Black Monday of October 1987, which was caused by a hurricane sweeping the south east of England.
The Stock Exchange is likely to come under pressure for compensation from traders who lost business during the outage and failed to meet the tax deadline.
Brian Mairs, head of information for Apcims, the trade body representing smaller stockbrokers, welcomed the FSA enquiry and urged it to publish interim findings within a couple of weeks.
He said most instructions in major firms had been fulfiled, because of the extended trading, but smaller traders did not have them fulfiled.
"They deserve to have some recourse where there are still issues outstanding," he said.
"It is individual traders that have been hit really hard by this," Mairs added.
The Stock Exchange Electronic Trading Service is run on Compaq Tandem NonStop Himalaya servers, first implemented in 1997. Compaq refused to comment on the outage pending the result of the Andersen/Stock Exchange enquiry.
Stock Exchange and Andersen Consulting
January 1992: Andersen is brought into the Stock Exchange by its then chief executive Peter Rawlins. Andersen takes over key managerial jobs in IT
April 1992: The London Stock Exchange contracts out all its IT to Andersen Consulting, under a five-year £50m contract that did not go to open competitive tender
December 1992: Andersen reports that the exchange's project to develop a new settlements system, called Taurus (which has not involved Andersen), is in serious trouble
March 1993: With a settlement worth £500,000 Rawlins resigns as chief executive of the Stock Exchange after the plug is pulled on the Taurus project
June 1993: The Exchange says it will trust its technological future to Andersen, which will replace all the existing systems
1995: The Exchange announces that traders can receive an extended range of services via its new data feed, The London Market Information Link, which broadcasts trade and quote data to the market. It replaces the exchange's older CRS feed. The London Market Information Link is part of Andersen's £81m integrated trading and information system, Sequence
1996: The final part of Sequence goes live on time and to budget. It is said to signal an end to a convention in which prices are set by "market makers" and deals struck over the telephone
1997: Exchange renews its outsourcing contract with Andersen
1997: For the first time in 10 years, dealers are unable to trade because of a problem with the London Market Information Link. The glitch brought share dealing to a halt for 45 minutes. When the London Market Information Link first went live it was said to offer "full recoverability and fast processing of data"
April 2000: The stock exchange is hit by worldwide publicity over a new problem with the London Market Information Link that causes the market to be shut down for about eight hours