LSE confirms system outage linked to RFQ for ETP functionality

Thursday’s outage affected all instruments aside from constituents of the FTSE 100, FTSE 250 and IOB securities.

Following all instruments on Partition 3 (of 3) of the LSE Order Book entering into a Halt state yesterday at 3.11pm, the London Stock Exchange (LSE) has now confirmed that the cause was a matching engine logic issue on Partition 3.

LSE specified that “the mirror process did not take over as would be expected in case of a hardware issue,” and that their investigations found the root case to be related to the Request For Quote (RFQ) functionality for Exchange Traded Products (ETPs). 

Following yesterday’s technical incident, all LSE order book securities opened as normal today, however the RFQ functionality is temporarily disabled for all ETP securities as the investigation continues.

Explaining the empirical process following the episode, LSE confirmed that Partition 3 was restarted in order to expire all open orders back to customers after the restore, completed just after 4.45pm.

“Given this timing, it was concluded that the closing auction for Partition 3 instruments should not be operated and that closing prices would be generated from the system based on trading up to the point of the Halt,” said the exchange.

Read more – ESMA publishes recommendations for trading venues in the event of a market outage

LSE disseminated the closing prices for the affected instruments just after 5pm yesterday, following standard methodologies set out in its ‘Business Parameters’.

Most order prices were based on the last order book traded price on Thursday. This was due to the fact that there was no closing auction in impacted instruments and all orders and quotes in affected instruments were deleted during the recovery activity. 

The outage is expected to lead to a renewed interest from regulators as to how trading venues should reinforce their operations and communication systems to be more resilient and effective in the event of these market outages.

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