Once again trading came to a standstill at the London Stock Exchange (LSE) in nearly 300 UK stocks yesterday, including the exchange's own shares due to a technical snag at one of the exchange servers.
Europe's oldest independent exchange. and one of the largest stock exchanges in the world with 3,233 listed companies from over 70 countries trading on its markets, said yesterday that a technical problem related to a server affected 1 in 12 UK stocks for 40 minutes from 3:04 pm London time until the close.
LSE ''is continuing to investigate an issue impacting our trading and information platforms and this issue continues to impact one-twelfth of London instruments. A closing auction will not take place for the affected stocks,'' the exchange said in a statement.
The breakdown came as a huge embarrassment for the LSE, which had announced a day earlier of a significant expansion to its exchange hosting service. Due to high customer demand, an entire floor of the LSE Group's central London data centre had been dedicated to clients wishing to host their servers.
On 8 September 2008, the LSE crashed for 7 hours driven by due to server overload on the news of the takeover of FreddieMac and Fannie Mae by the US government, and eventually crashing due to a system glitch. (See: Computer error halts trades on LSE)
At that time, the breakdown had occurred just days after the LSE announced plans to improve services since it was facing competition from several new platforms that promise low-cost, high-speed trading systems such as the Turquoise consortium of nine banks including Citi and Goldman Sachs from among other US banks, Japanese investment bank Nomura Holding Inc.'s Chi-X, Nasdaq OMX's European platform and Plus Market.
Computer World had reported at that time that though the LSE denied the outage was caused by the TradElect system, it is widely believed in London trading circles that the problem was caused by Microsoft's Windows-based platform.
The 7-hour shutdown came after the exchange experienced similar shutdown for 8 hours in April 2000 because of a problem with London Market Information Link, and closure of the exchange for the entire day in October 1987 as storms battered England.
The LSE was mulling to dump the Windows-based platform. Microsoft's web page does not mention technical glitches in its TradElect system over the past six years at LSE.
According to analysts, the LSE has lower trades per second. Based on official numbers, the LSE executes about 30 trades per second, while the New York Stock Exchange does an estimated 590 per second.
LSE is currently holding exclusive talks to acquire Turquoise and has paid $30 million to MillenniumIT-a Sri Lankan technology-services company's trading system.