Stock Plunge Leads to Glitch on NYSE's European Derivatives Exchange, Again
securitiesindustry_news, August 4, 2011
Tom Steinert-Threlkeld
A computer glitch halted trading on NYSE Euronextâs European derivatives exchange for about an hour Thursday.
The malfunction on NYSE Euronextâs Liffe market came in the wake of the biggest plunge in stock prices since the May 6, 2010, Flash Crash.
Price updates on its European stock indices were interrupted during this period, Bloomberg reported.
Trading in options, futures and other derivatives resumed at 6:10 p.m. in Paris. Trading was suspended from approximately 4:30 p.m. to 5:20 p.m. local Europe time.
âFor the system to be down today is a total disaster,â Lex Van Dam, a London-based fund manager at Hampstead Capital LLP, told Bloomberg. âThis is a really scary market. Itâs so busy and for people not to be able to get out of their positions or hedge on today of all days is really terrible.â
NYSE Euronext matches equity trades on its Universal Trading Platform. Deutsche Boerse AG (DB1), Deutsche Boerse uses a technology called Xetra. NYSE Euronext officials said this week that the two platforms are likely to be melded together, if the two firms complete their merger.
That merger was announced in February but the European Commission said Thursday it was beginning an âin-depth investigationâ of the plan. At issue: The merger of the two firmsâ derivatives exchanges in Europe. DB has Eurex; NYSE Euronext has Liffe.
The malfunction on Liffe is the sixth in a string of glitches in the last two months for the parent of the New York Stock Exchange.
The companyâs equity indexes in France, Belgium, Portugal and the Netherlands didnât update for almost two hours on July 29 and 3 1/2 hours on July 12, Bloomberg noted.
That followed a June 27 glitch that stopped trading in CAC 40 stocks for more than 45 minutes and two incidents the previous week that delayed the start of trading by an hour in Paris, Amsterdam, Brussels, Luxembourg and Lisbon and halted transactions in the largest Dutch and Belgian stocks.
In its conference call with financial analysts this week, Dominique Cerutti, Deputy Chief Executive Officer and Global Head of Technology at NYSE Euronext, said the firm had assigned a task force to resolve the problems and expected âresults in the next 30 days.â
Yes, indeed we had on the European side, 4 incidents to be clear in June, July and that we take that very seriously. 3 of the incidents and the one you're mentioning are originating in a complex cause.
We made -- since you're asking, we made an update on a quarter call that was mandatory on one of our software and it does created some packet loss, we have the best expert on our from the vendors to analyze that. And it is this change combined with higher market volume and some new behaviors enabled by the new capabilities that we're offering to members, that are causing some instability in some legacy software that we still run.
So that's why that happened. I don't want to go deeper to the quite complex. Again we have analyzed the situation, we have taken mitigation actions in the short-term and maybe more importantly, we're running a task force and we expect results in the next 30 days to check whether or not we have other vulnerabilities in our system and make sure that we will come back to our best-of-breed stability.
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