LSE blames software glitch for trading blackout

London: The London Stock Exchange Group said yesterday that a software glitch - and not high trading volumes - was to blame for a seven-hour shutdown that angered customers on one of the busiest days of the year on world equity markets.

The LSE, which is facing increasing competition from new European trading platforms, also attempted to reassure traders unhappy about the blackout, saying that it had changed the software programming so that a similar problem would not have such a huge effect.

The lengthy shutdown wiped out most of Monday's trading session, leaving many clients unable to cash in on a worldwide stock market boom that followed the US government bailout of mortgage giants Fannie Mae and Freddie Mac.

The LSE's confirmation of a software issue discounted speculation from traders that the high volume of business in the hour of trading - the leading FTSE 100 index surged almost four per cent - before the system seized up could have been a factor.

"It was related to software and two computer events that coincided," the exchange said. "We have put in a fix and we are confident that should the coincidence reoccur, it won't have the same impact."

The market was trading as normal yesterday, with the FTSE 100 index up 0.5 per cent, but many customers warned that the biggest disruption to trading in more than eight years would likely speed business to the rival platforms.

Competition

New platforms include the investment bank-backed Turquoise, Japan-ese investment bank Nomura Holding Inc's Chi-X, Nasdaq OMX Inc's European platform and Plus Market.

Turquoise, which is supported by nine investment banking heavyweights, has said it aims to grab some five per cent of the LSE's trading base within months of its launch this month, while Chi-X has taken about 10 per cent of the trade in blue chip stocks in recent months.

Nasdaq OMX Europe, which is due to go live later this month, expects to have five per cent of the market within a year, and 20 per cent in the longer term.

Estimate: six-figure sum lost

Angus Rigby, chief executive of Leeds-based broker TD Waterhouse, estimated his firm lost a six-figure sum worth of business due to the shutdown.

"There was a big sigh of relief to see everything working as normal this morning," said Rigby. "The reality is that anyone who was thinking of using other exchanges, that is a path they will now have to consider abit more."