Reuters outage raises BCP questions

LONDON – The pitfalls of relying on electronic systems was made clear to FX traders in mid-October, as a power outage at Reuters' technical centre left it without pricing in European currencies for seven hours. The outage, which began at 2.34pm in London (9.34am in New York) on Tuesday, October 12, hit real-time data from the vendor's dealing platforms, so that the data from trades on Reuters Dealing and the EBS spot FX platform did not feed through to Reuters' datafeed. To avoid the risk of displaying off-market rates, traders had to make prices for their own platforms manually, in a throwback to the pre-electronic era. Some trading on Dealing 3000 terminals in London were also affected, said a spokesperson: "Customers may have lost access to European end-of-day data and FX transactional capabilities."

Some services were back up after the close of London trading at 8.34pm, although others, such as historical news data, were left with gaps for the rest of the week. Because of the timing, traders in the US time-zones were hardest hit.

"It was a pain," said one currency trader at a US bank in New York. "It left a lot of people with no idea where the market was."

The problems were replicated in Chicago. "There has been lower volatility," reported a trader at one investment firm. "A lot of banks make their prices based on that data." And back in London, brokers were fuming. "It cost us in broking business," said one source at a major FX broking house. "Our information feeds were down. People take Reuters data as de facto prices to run models. If people can't generate indicative prices, they can't do business."

While Reuters does not have a monopoly on FX pricing – main rival EBS has its own datafeed – for coverage of sterling crosses and other European currencies, such as the Scandinavian crosses, Reuters' data is – usually – unrivalled. "Liquidity was drained out of the market in those currencies that are not on EBS," said another trader in New York.

The outage also affected vendors that use Reuters' price data. Edinburgh-based WM Company, a subsidiary of State Street that provides market data for investors, was unable to produce its price fixings, for example. Another vendor that uses Reuters data as a key part of its offering said: "It is thoroughly inconvenient and pretty annoying."

Reuters said the problems were due to a power outage following the failure of circuit breakers in two of the firm's four power cabling units. The firm is still investigating the impact and cause of the disruptions, said a spokesperson. But in the current climate, with business continuity plans and disaster recovery high on the agenda for banks, financial institutions and vendors alike, those answers can't come soon enough for Reuters' customers. "It raises questions about the redundancy Reuters has built into its data centres and networks to have data unavailable for hours," said one banker in New York. OpRisk