High Frequency Confusion at London Stock Exchange

The London Stock Exchange is in the process of upgrading its electronic trading systems to attract more high frequency traders, and restore LSE’s digital reputation after an embarrassing technological collapse in November last year. But since the upgrade began this week there’s just been one hick-up after another. On Monday the UK exchange was forced to delay the migration of the full UK order book. On Tuesday the closing process was delayed, resulting in confused computer algorithms, wrongfully executed trades and sparking volatility. Today traders was left frustrated by incorrect pricing.

“We are confident with the systems generally and how they’ve performed, given the scale of the project.”

London Stock Exchange


Both Thomson Reuters, Selftrade and TD Waterhouse are warning their clients that they in “some scenarios” are not able to provide correct bid and ask prices, and that there’s no estimates  on when the problems will be fixed. The effect is confused computer algorithms, triggering trades at the wrong time and sparking volatility, the Financial Times reports.

“People were trading at prices they weren’t expecting to be trading at,” one trading expert at a foreign bank in London says.

Other traders, however, say they have seen little disruption: “It’s smooth sailing here,” another trader says.

And – of course – the London Stock Exchange don’t see any problems at all.

“We are confident with the systems generally and how they’ve performed, given the scale of the project,” a spokesperson says. “We have had a constant dialogue with customers and the feedback we’ve had has been very good.” Adding that LSE is looking into the matter, but are still “confident that the system will be okay today”.

Anyway – the London Stock Exchange was on Wednesday dealing with the fallout from another technology glitch as some traders expressed frustration over disruption to the bourse’s closing auction at the close of business on Tuesday, according to FT.

Execution-only brokers including Selftrade are warning that their websites are not showing correct prices.

Thomson Reuters warns clients that its bid and ask prices are, “in some scenarios, intermittently updating with zeros ahead of an updated value,” saying the problem was first identified on Tuesday morning but could not  give any estimate on when it would be fixed.

TD Waterhouse says in a statement: “Currently a technical issue between the LSE and one of our data providers is affecting stop-loss orders on UK stocks. As an interim measure we have taken the decision to manage the existing orders on our book and stop taking new orders.”

Adding: “Customer impact has been minimal as stop orders are a small fraction of our daily trading activity and we working with the LSE and the data provider to fix the problem. We hope to bring this to a speedy resolution.”

The LSE suffered a blow to the credibility of its new technology in November when a two-hour outage hit not long after it had switched to using MillenniumIT technology on its Turquoise trading platform.

Initially the LSE indicated that the problem may have been sabotage but an investigation concluded last month that it had been “human error”.

Wonder what they will come up with this time…

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