Friday, August 5, 2011


NYSE Euronext has confirmed that a breakdown in the outbound messaging system from its trading engine was behind Thursday’s 90-minute outage on Liffe, Europe’s second largest derivatives platform.
The group described the breakdown as a “serious incident” and came amid heavy volumes as stock markets plunged. It puts further pressure on NYSE Euronext to ensure the reliability of its platforms at its European operations after Thursday became the sixth glitch in two months.
The latest outage came only three days after the group disclosed its previous glitches had arisen in part from high volumes and older software.
The breakdown took place on Liffe’s trading engine, and hit contracts such as euribor, eurodollar, and some FTSE index futures. Separately prices for the indices of the Paris, Amsterdam, Brussels and Lisbon equity markets were also affected.
Messaging is the lifeblood of the world’s trading systems. A message - whether market data or a trade - is sent across trading platforms and fibre optic cables. As trading is increasingly dominated by high-speed trading and algorithms, the speed to send and receive messages becomes critical to beating rivals.
In a notice to members on Friday, Liffe said the cause of the outage was software code that distributed messages from its trading platform to customers, and also “to certain other internal applications that are used to monitor and control the markets,” it said.
“NYSE Liffe would like to sincerely apologise to its customers and their clients for the inconvenience caused,” it told members.
A spokesperson for the London Stock Exchange said: “The UK markets are performing normally, and performing as expected.” However Borsa Italiana, owned by the LSE, was unable to publish the price of the blue chip index towards the end of the day because of technical problems.
The spate of outages has led NYSE Euronext to assign a taskforce of internal and external IT experts to make further investigations.
On Tuesday Dominique Cerruti, deputy chief executive and global head of technology, told analysts on an earnings call that glitches in June and July were down to upgrade to some older software had created some so-called “packet loss”, when the packets of data sent across a computer network fail to reach their destination.
“We have the best expert on our camp and from the vendors to analyse that, and it is this change combined with high market volume and some new behaviours enabled by the new capabilities that we’re offering to members that are triggering some instability in some legacy software that we still run, so that’s what had happened,” he said.
The experts will assess if there are further vulnerablilities in NYSE Euronext’s systems and Mr Cerruti said he hoped to have an answer by the end of the month.
The group faces a battle to fix its technology in the face of fierce competition from rivals. “This week we have seen our second highest trading day since Chi-X Europe began but the market shares tell an interesting story. We have been consistently more than 30 per cent of all FTSE 100 trading and more than 20 per cent on a pan-European basis,” said Alasdair Haynes, chief executive of Chi-X Europe.
NYSE Euronext is awaiting antitrust clearance for its proposed combination with Deutsche Börse. Shareholders of the two companies have backed the deal, which targets large-scale savings by combining technology, clearing and administrative functions. It also plans a central European market operations hub for cash, derivatives and clearing.
The two have yet to detail how exactly they would merge but Duncan Niederauer, chief executive, confirmed on Tuesday the group would develop its own matching engine, rather than scrap one of them.
“The system we end up using won’t be Universal Trading Platform [operated by NYSE Euronext] or what DB runs right now; it will be probably be an amalgam of all of the above,” he said.