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.
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.
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.
The exchange reports a fall in revenues during the same quarter, while uncertainty remains over the future of its IT setup.
London Stock Exchange starts testing alternatives to TradElect platform in a bid to improve speed, and reduce costs.
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.
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.
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.
On 21 December, the LSE acquires a controlling stake in Turquoise, a dark pool or anonymous trading platform, which was launched by a consortium of banks a year earlier. Turquoise, which runs on the TradExpress platform from IT supplier Cinnober, will be merged with the LSE's equivalent Baikal platform and both will be moved to the new Millennium Exchange Linux platform from MillenniumIT. The move is seen as an aggessive step to slash trading times.
The LSE begins migrating its systems to the new Linux-based platform.
The first part of the switchover to Linux is pencilled in for September. "We will attempt to minimise disruption as much as possible by providing early access to the Millennium Exchange software code through our Customer Development Service,” the LSE tells clients. The new platform is “highly scalable” and “agile”, it says, describing it as “one of the fastest, most reliable and technologically advanced markets in the world”. In case of any issues on the platform or external disasters involving the datacentre, an failover site is in place outside the city, it says.
The London Stock Exchange announces on 20 April that Turquoise will go live on Linux with a "big bang" approach, instead of a soft migration. The main cash markets platform, TradElect, is a larger platform and will be migrated more slowly, from 1 November. Two weeks later, the LSE creates creates virtual access to Turquoise so that co-located trading firms can test the new Linux platform, which it says will save it £10 million a year in costs.
The LSE delays the Turquoise migration to Linux by two months to 4 October, in order to give clients and IT suppliers more time for development and testing. the new date, it says, is "scheduled in response to client and vendor feedback".
On 16 July, it becomes apparent that LSE chief technology officer Robin Paine has left the company. Paine had been instrumental in bringing in the Microsoft .Net-based TradElect platform. The reason for his departure is not confirmed.
On 5 October, 24 hours after the Linux-based launch on Turquoise, the new platform experiences a one-hour outage. A "networking issue" is to blame, the LSE says, but no detail is given. Analysts say they expected "teething problems" on such a large migration.
The larger cash markets migration is looming. On Saturday 9 October, the LSE conducts its first live test of Millennium Exchange in the main trading environment. The LSE's clients, trading firms, use the "dress rehearsal" to get a feel for the new system and to test how effectively their trading technology interacts with Millennium Exchange.
The LSE claims, on 20 October, that its new Linux-based matching engine is the fastest trading technology in the world. The claims are largely accepted by trading technology experts, but observers warn that other exchange's systems - particularly those of NASDAQ in New York - are fast approaching the LSE's speed.
After a third live test, on 1 November the LSE decides to postpone the launch of Linux on its cash markets, with rumours the system would go live on 15 November, the contingency date. The system would have gone live that day. It is understood that trading firms said more time was needed for the overall infrastructure to be ready.
A day later, a major problem on the Turquoise network knocks out the platform for two hours. The LSE declines to define the problem.
Later that day, the LSE tells traders that a "suspicous" incident has occurred on its network. The Financial Services Authority and police are informed. The exchange delays the migration until early 2011, because December is an agreed 'no change' period for technology.
On 4 November, it is reported that an IT contractor to the LSE has been suspended. No details are given.