LSE trading delay an internal problem

By Rebekah Tunstead | 19 August 2019

A “technical software issue” at the London Stock Exchange (LSE) which delayed FTSE 100 and FTSE 250 trading was not caused by a third-party vendor, confirmed a spokesperson by email.

For Amir Nabi, chief operating officer at Dolfin some organisations may have been put out by the unexpected interruption to trading.

“After the volatile week we’ve had I think the knock-on effects in some cases would have been quite big. For example, if you’re a portfolio management business, or you have that function like we do, clearly you are dependent on being able to trade in the market hours, you want to execute your ideas and time is key,” says Nabi.

“Because it is not something that wouldn’t usually happen, some organisations would simply be unable to cope with that and it does generally cause a bit of confusion in the marketplace,” he says.

At 7:50am on August 16 the LSE informed traders it was investigating a “potential Trading Services issue.”

The issue was resolved, and trading began at 9:40am, rather than the usually 8am start.

An LSE spokesperson confirmed to The Guardian that Friday’s software disruption was the longest outage since 2011.  

“London Stock Exchange experienced a technical software issue this morning that affected trading in certain securities, including FTSE 100 and FTSE 250 stocks. Following resolution of the issue regular trading in all securities commenced at 09:40 am,” said an LSE spokesperson in an email.

The issue comes after the LSE announced on August 1 it had agreed “definitive terms” to acquire Refinitiv, a global provider of market data and infrastructure.

With greater dependency on technology functions in trading, such software issues could impact firms’ technology partnerships, according to Nabi.

 “As you look at the cost and potentially look to outsource certain functions or look to review you are spending on certain supports or infrastructure, back-up servers, etc., then when there are situations like today, that could potentially be compromising,” says Nabi.

This comes after the Consolidated Tape Association announced on August 12 it was having processing issues with its Consolidated Tape System (CTS) and Consolidated Quotation System (CQS) which impacted end-of-day pricing data for New York Stock Exchange listed stock.  

The WSJ reported this technical disruption came during the NYSE upgrading of its core technology.

For Nabi, such disruption to technology is inevitable.

“I think quite a few people, including some of our traders were hoping for a quiet Friday morning after all the volatility in the markets this week,” says Nabi. “But it would be naïve to think that infrastructure can be foolproof, and we can be immune to either software issues, hardware issues, and attacks in terms of cybersecurity threats.”

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