Network failure halts London Stock Exchange trading

Computerworld UK - LONDON -- The London Stock Exchange suffered a breakdown today on what looked set to be one of the busiest trading days of the year.

The exchange suspended trading as dealers reacted to the dramatic economic news that the U.S. government had taken over control of mortgage groups Freddie Mac and Fannie Mae, in the biggest financial bailout in world history.

Trading was halted at 8:45 a.m. London time. According to Reuters, it was not restored until shortly before close of the trading day, which is 4 p.m.

The LSE said the system had been hit by a "connectivity issue" and insisted that the problem did not lie with its flagship TradElect trading platform.

The market is now in "auction phase," which means participants can decide on prices and place orders, but those orders will not be matched until the system is restored.

Traders are being asked to reconnect to the network. Once they have done so, the exchange will give 15 minutes notice before going live.

The breakdown occurred just days after the LSE announced plans to improve services as it competes against a range of new entrants in the market.

Among the LSE's initiatives is a move to slash the time it takes to complete a trade from six milliseconds to three as the exchange completes an upgrade of its 14-month-old TradElect platform.

The exchange has also launched a server hosting service for investment banks to enable traders to reduce network latency and further cut the time it takes to complete a trade. The Exchange Hosting service allows banks to move their servers into the exchange's data center next to the LSE's TradElect trading platform. This shaves milliseconds off the time it takes to complete trades as it eliminates network latency, the exchange said.

The exchange has been upgrading TradElect to bolster its capacity and decrease latency. The LSE said: "In September, current capacity on TradElect will initially double to 10,000 continuous messages per second. In October, it will double again to around 20,000 continuous messages a second and end-to-end execution latency on TradElect will be reduced by 50%, from six milliseconds to three milliseconds."