The London Stock Exchange has postponed its platform upgrade to early next year after customers were disconnected from its multilateral trading facility (MTF) Turquoise in “suspicious circumstances” during morning trading on 2 November.
The UK regulator, the Financial Services Authority (FSA), has been called in following the incident, which saw Turquoise shut down for two hours, between 08.31 and 10.37 UK time. The LSE said the incident appeared to have been caused by human error. A full internal investigation has now begun.
“Preliminary investigations indicate that this human error may have occurred in suspicious circumstances,” the exchange said in a statement. A spokesperson confirmed that the FSA has been informed but would not be drawn on whether other regulators or law enforcement authorities had been notified.
Turquoise migrated to the LSE’s new Millennium Exchange trading platform on 4 October and experienced two separate technical problems in its first week. However final testing on 30 October had reportedly gone well ahead of moving the rest of the group's UK cash equity trading to the new system, built by the LSE's in-house technology unit, MillenniumIT, and the exchange was expected to confirm a date for the switch during this week. Previously set for 1 November, the migration of the LSE’s Main Market to Millennium Exchange was due to take place at some point after 14 November.
However, following the incident, the exchange released a statement saying that the upgrade would now be rescheduled for 2011. “Given that December is an agreed change freeze period, the London Stock Exchange Group will work in partnership with customers to agree a date as early and practicably as possible in 2011 to reschedule the Main Market migration,” the statement read.
A spokesperson added that it would be “irresponsible” to go ahead with the migration while the internal investigation was ongoing.
On 13 October, NYSE Euronext's European markets were also a victim of human error. Trading was halted in equities, bonds and exchange-traded funds across the exchange group’s markets in Lisbon, Amsterdam, Paris and Brussels from 16.42 central European time until 17.23.
Turquoise's share of UK displayed order book equity trading fell to 3.64% on the day of the outage from 5.40% on the previous day. The MTF's share of dark trading in UK stocks fell more dramatically. Its mid-point dark order book claimed just 10.29% of non-displayed orders in UK equities on 2 November, compared with 19.82% the previous day, according to Thomson Reuters. Turquoise had taken over from Chi-X's Chi-Delta as the leading dark MTF in Europe during June and achieved a 27.46% market share of all European non-displayed trading in August. This had dipped to 17.35% in October and slid to 10.7% yesterday.