Chi-X was quick to take advantage of yesterday’s connectivity failure at the LSE, sending out a broadcast email to traders that it had liquidity and was working as normal.
Buy- and sell-side firms were left unable to trade stocks on the London Stock Exchange (LSE) at close of business yesterday. A connectivity issue with the exchange's real-time data dissemination system, Infolect, which underpins LSE's new dealing platform TradElect, left equity traders unable to see the market data they need to trade, including stock prices.
Nervousness gripped traders this morning with rumours circulating that the market would not open until 9am. While this proved unfounded, one head trader admitted that confidence in TradElect had been dented by yesterday's events. The LSE is adamant that there was no problem with the trading system.
Faced with yesterday's outage, for the fortunate few with little outstanding it was a case of "pulling up the stumps" rather than awaiting the closing auction. Most badly affected were options traders, where the final settlement price is on the close and there is no option but to trade in the closing auction. "People who wanted to trade turned to Chi-X," commented one trader, "It was up and running and robust." For some, however, the stocks they were seeking weren't available on Chi-X.
Still in its infancy, Chi-X does not offer the same breadth of stocks as the LSE. Were it to do so, it would have won a substantial amount of new business yesterday, commented one major broker. The glitch gives a boost to Chi-X, which claims it trades ten times faster than Europe's national stock exchanges. The connectivity failure comes at a particularly inopportune time for the LSE, with MiFID having gone live a week ago, bringing new competition to the exchange space. "This must have been great news for Chi-X," commented one head trader.
Another source agreed, saying, "It adds momentum to those talking about trying alternative venues." But he doubted that yesterday's outage would do much lasting damage to the LSE. "The alternative venues will try to jump on this news and get momentum but that trend is already happening. It won't have a huge negative impact on the LSE," he said.