The London Stock Exchange (www.londonstockexchange.com) issued the following press release about its trading halt on Tuesday 2 November: “Investigations into this morning’s trading disruption on London Stock Exchange’s pan-European MTF (multi-lateral trading facility), Turquoise, have revealed that human error was to blame for the disruption that began at 08:23 a.m. this morning (sic). The issue was swiftly isolated, and normal trading resumed at 10:30 a.m. Preliminary investigations indicate that this human error may have occurred in suspicious circumstances. The LSEG take this matter very seriously and a full internal investigation has now begun. The relevant authorities have been informed.
“In light of this incident, coupled with necessary network upgrades to address ultra low latency and high flow inherent in the new platform, the Group has regrettably been forced to postpone its Main Market LSE technology migration for SETS. Given that December is an agreed change freeze period, the London Stock Exchange Group will work in partnership with customers to agree a date as early and practicably as possible in 2011 to reschedule the Main Market migration.”
This may give participants at the African Stock Exchanges Association conference in Livingstone, Zambia (10-12 November) something to talk about. According to reports an announcement was due later on 2 November about the LSE’s migration of its main trading platform, TradElect, to faster systems designed by Millennium IT (www.milleniumit.com), which the LSE acquired in 2009. Millennium IT is also a sponsor of the ASEA conference and has a key position on the agenda to speak on technology links to create more urgently-needed liquidity on African stock exchanges. MillenniumIT’s trading and central depository systems are already in use in many exchanges across Africa (see previous blog) and its influence is likely to grow.
Turquoise had gone live with the MillenniumIT trading system on 4 October and the LSE’s main platform was due to switch early in November 2010.
However, none of the sources quoted in a Financial Times article seem to think there is any problem with the LSE strategy to migrate to MillenniumIT’s modern multi-instrument trading systems. They note that the LSE needs modern high-speed trading systems to stay in competition for market share, including for European equities against competitors Chi-X, BATS Europe and NYSE’s Euronext – several intermediaries switched trades to these on Tuesday when Turquoise went down. Traders will need to be reassured about the LSE’s reliability and there are some questions about such a long delay in implementing the new system. It was also noted that many leading exchanges worldwide have been affected by tech problems and none has suffered lasting damage.
Another UK source reported on 4 November that an IT contractor with access to the LSE data centres has been suspended.
South Africa’s JSE, the Namibian Stock Exchange and Norway’s Oslo Bors are all exchanges which use TradElect because of links to the LSE, and could switch to MillenniumIT trading platforms in 2011.