Hamsters in the machine

Thu, 08 Nov 2007 11:32:19 GMT

Quelle horreur! The London Stock Exchange’s whizzy trading system went down yesterday afternoon less than an hour before the close of trading. All pandemonium broke loose as the data went haywire and could not be relied upon by my brother traders. Cityblogger was forced to drink a round of medicinal whiskeys to calm himself, and not for the first time this year.

Apparently there was a problem with the electronic connection between the order display system and the market. Or to put it in more technical terms, the hamsters had given up the ghost. The last time a similar glitch of this magnitude happened was back in 2000.

“It’s sod’s law that it happens when the markets are weak,” David Jones, chief market analyst at CMC Markets, told Cityblogger. “It was all over the place. The data was completely unreliable and everyone was panicking. But it’s just one of those things.”

Critics have been quick to point out that this embarrassing cock-up is a particular blow to the LSE considering a handful of banks are planning to introduce a competing system called Turquoise.

“Yesterday’s debacle with the LSE’s trading system will really irritate the market as unnecessary losses may have been incurred,” says David Buik at Cantor Index. “It is seven years since this happened last time. So is it unfair to expect the LSE to run systems in duplication to avoid inconveniencing the market, which should be unnecessary. Ms Furse will be only too aware that competition will increase in the months to come."

Surprisingly, shares in the LSE were up 2.4 per cent in Thursday’s morning trade to 1748p. But then according to data released earlier this week by the exchange, trading in October was buoyant, with order book trades in UK equities up 71 per cent to 552,715 on October 2006.

What made Cityblogger chortle is the little video clip on the LSE’s website pushing its TradElect Release 2 as ‘the future of trading’. Apparently this little blighter, as well as making the tea, “further improves the performance of the new system” and delivers the LSE’s “suite of MiFID solutions”. Ah, what did we do in the days before ‘solutions’ one wonders. Maybe things actually worked.

If you’ve got a spare couple of minutes it’s jolly fun to watch, and features a rather sweaty-looking runner sprinting along looking very serious and dynamic. Cityblogger wonders if they’ll now edit in a little extra section where the poor chap trips over his laces.

Cityblogger is taking a little break next week and will return the following week. In the meantime, happy trading, my friends.

Technorati Tags: London Stock Exchange , CMC Markets , Cantor Index , Turquoise

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Hamsters in the machine