November 26, 2009

London Stock Exchange timeline of technical problems

The London Stock Exchange has halted electronic trading after experiencing its fourth major technology glitch in just over a year. Here we take a look at the technological trials and tribulations of one of the world's biggest exchanges.

By Siobhan Chapman

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September 2008

The LSE suffers an almost eight hour outage as a result of technical problems. The disruption was particularly significant that day given the FTSE 100 had already risen almost 200 points in early trading, with more than double the normal of shares changing hands, after details of the US Government’s bailout of mortgage giants Fannie Mae and Freddie Mac.

The LSE maintained that TradElect was not responsible for the September 2008 outage, but has since, nevertheless, made the decision to replace the platform to improve trading speed.

June 2009

Reports first emerge that London Stock Exchange (LSE) plans to dump TradElect, a £40 million IT trading platform based on Microsoft .NET technology.

Dropping the platform, which had only been updated a year before by Accenture, was a dramatic admission that the system, despite pumping millions of pounds into the technology, was flawed.

July 2009

The exchange reports a fall in revenues during the same quarter, while uncertainty remains over the future of its IT setup.

August 2009

London Stock Exchange starts testing alternatives to TradElect platform in a bid to improve speed, and reduce costs.

September 2009

The open source community welcomes the news that LSE has chosen to replace TradElect with Linux-based trading platform Millennium IT.

The announcement sparks a war of words between open source pundits and proprietary systems makers such as Microsoft. TradElect is based on Microsoft. NET, and runs on HP ProLiant Servers and SQL Server 2000 systems within a Cisco network architecture.

IBM beats the drum about Linux, points out that LSE was the largest exchange to run Microsoft .NET proprietary systems while its German counterpart Deutsche Borse has moved to Linux environments with IBM messaging. Meanwhile Microsoft defends its position, and speaks out to detail its strengths as a supplier to exchanges with complex, high load environments.

October 2009

Reports emerge LSE plans to continue its acquisition trail and buy alternative trading facility, Turquoise Trading. Turquoise, the share trading system, backed by a group of the world’s largest investment banks, is renowned in financial circles for investing heavily into its technology infrastructure to reduce latency. Ralph Silva, senior analyst at financial technology consultancy Tower Group, said the Turquoise was “easily a generation ahead of the LSE”.

In the same month, the LSE completes its MillenniumIT deal.

But later that month, LSE is hit by a major data glitch that leads to an hour long outage, a lifetime for investors.

November 2009

On 11 November, another London Stock Exchange server software glitch halts trading

On 25 November, London Stock Exchange admits it has taken a £20 million hit on the soon-to-be redundant TradElect platform. The LSE reported a 37 percent fall in first half profits hit by increasing competition from new platforms such as Chi-X and Turquoise.

Within hours of this announcement, the London Stock Exchange is knocked offline. From about 9.30am, on 26 November 2009, the exchange is unable to complete trades and blames connectivity problems. The outage is seen by some as particularly embarrassing following the financial results.

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