London stock trading suffers outage

By JANE WARDELL

posted: 75 DAYS 10 HOURS AGO

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LONDON -The London Stock Exchange PLC halted trading for three-and-a-half hours on Thursday after a technical glitch prevented some customers from connecting to its systems.

The LSE, Europe's oldest independent exchange, said taking trade offline was the only way to ensure a fair and orderly market after customers reported the connectivity problems in early trading.

The exchange is still looking into the root cause of the embarrassing outage — the second significant technical problem in just over a year — and said it was too early to judge the extent of the effect on trade or lost business.

Market players were able to continue to place buy and sell orders into the exchange's order book after trading was taken offline at 10:33 a.m. (1033 GMT), but those trades were not executed until trading was resumed at 2 p.m. (1400 GMT).

"We regret the inconvenience that today's disruption to trading has caused for our clients," LSE CEO Xavier Rolet said in a statement. "Having resolved the immediate issue, we are working hard to ensure this doesn't happen again ahead of switching to MillenniumIT's trading platform next year."

The LSE is buying Sri Lankan technology-services company MillenniumIT for $30 million to overhaul its technology as it loses market share to multilateral trading facilities such as Chi-X and BATS since pan-European regulation opened the market to competition in 2007.

It acknowledged this week that increased competition and lower trading were to blame for a 40 percent drop in first half net earnings to 49.3 million pounds ($82.4 million). Revenue was down 9 percent to 310.9 million pounds.

LSE spokesman Alistair Fairbrother said there was no suggestion Thursday's problems were related to heavy trading activity early in the session — stock indexes in both Europe and Asia were down sharply as investors fretted over debt problems at Dubai World, a government investment company, and the continued fall in the U.S. dollar. Those factors were driving interest on a normally quiet day — Wall Street is closed for Thanksgiving Day.

The IG Index head of market analysis, David Jones, said the failure of the LSE system was likely to have a "psychological effect" on an already jittery day, making nervous investors more likely to head for the exit.

The FTSE 100 index, which was frozen at 5,264.97 — down 99.84 points — when trading was halted, fell even further when trade resumed. The benchmark index closed 170.68 points lower at 5,194.13.

The LSE, which has 2,800 companies listed on its boards, traded an average of 5 billion pounds worth of shares in October. The Milan stock exchange, owned by the LSE, remained open for trade of London stocks throughout the LSE outage.

Just over a year ago, the LSE experienced its worst outage in almost a decade when a software glitch was blamed for a 7-hour shutdown that angered customers on one of the busiest days of the year on world equity markets.

On that day in September 2008, the shutdown left many clients unable to cash in on a worldwide stock market boom that followed the U.S. government bailout of mortgage giants Fannie Mae and Freddie Mac.

2009-11-26 15:38:42