London Stock Exchange hit by outage

LOSSES & LAWSUITS

LONDON – The London Stock Exchange experienced its first outage in seven years on November 7 when its much vaunted high-speed trading system, TradElect, ground to a halt 30 minutes before close at just before 4pm. The LSE was forced to wipe clean its electronic price display system and extend its closing auction from 4.30pm to 6pm.

During the busiest time of the day, traders were left without prices for the exchange's indexes for nearly three hours. According an LSE spokesperson, the problem did not lie with TradElect; the three interactive gateways of Infolect, the electronic connection between the system that displays orders to buy and sell shares and the market, had failed for an unknown reason. Infolect – launched two years ago in place of LSE's London Market Information Link platform – sends out about 10 million separate pieces of market information daily, including share prices, to about 100,000 terminals.

Although traders were nervous before trading began the following day, the exchange opened on time and was fully operational. The timing of the glitch could not have been worse. The Markets in Financial Instruments Directive went live only days before the outage and has opened up the exchange to competition from multi-lateral trading facilities such as Project Turquoise and other start-up exchanges. The LSE needed to show that its facility was above the rest, and although this glitch was only minor, it might have dented the confidence of some traders. It has certainly embarrassed the exchange, which had been lauding the superiority of TradElect before its launch.

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