LSE investigates Monday’s crash

Daily news headlines

The London Stock Exchange is investigating the connection problem that led to a suspension of trading for almost all of Monday

LONDON – Share prices rose and international markets rallied on Monday, in reaction to the US government’s rescue of stricken mortgage lenders Fannie Mae and Freddie Mac. But at the London Stock Exchange (LSE) screens froze and traders were left in the dark, while counterparts in New York, Paris, Frankfurt and Tokyo all cashed in on rallying prices. The LSE is now investigating the costly communications crash.

Orders were suspended at approximately 9.15am, just as market activity began to surge in the wake of the Fannie Mae and Freddie Mac bailout. Despite regular LSE website updates about efforts to regain “consistent connectability”, trading did not resume until 4pm – leaving only half an hour to make up for a day’s hiatus.

Bob McDowall, research director at TowerGroup, says: “This is very damaging to the LSE’s reputation and to London as a financial centre for trading equities. The LSE will almost certainly lose competitive advantage to the alternative trading systems and even other global exchanges.”

No explanation has yet been given by the LSE, although reports suggest the blackout might be linked to weekend upgrade work carried out as part of the exchange’s merger and integration with Milan-based Borsa Italiana.

On Monday, many traders said they had resorted to using the Turquoise and Chi-X exchanges to continue trading. However, these recent LSE rivals still rely on the traditional exchange as a source of reference pricing.

The glitch harks back to the troubled launch of the LSE’s new Tradelect high-speed trading platform last year. That rollout led to the exchange’s first computer crash in seven years on November 7, when the highly anticipated system ground to a halt half an hour before the close of trading. The LSE was then forced to erase its electronic price display system and extend its closing auction from 4.30pm to 6pm.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Chartis RiskTech100® 2024

The latest iteration of the Chartis RiskTech100®, a comprehensive independent study of the world’s major players in risk and compliance technology, is acknowledged as the go-to for clear, accurate analysis of the risk technology marketplace. With its…

T+1: complacency before the storm?

This paper, created by WatersTechnology in association with Gresham Technologies, outlines what the move to T+1 (next-day settlement) of broker/dealer-executed trades in the US and Canadian markets means for buy-side and sell-side firms

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here