On Thursday, the London Stock Exchange experienced an outage which halted trading of hundreds of small-cap stocks. This was a blow to a marketplace that has been suffering from a lack of new listings this year and a falling trading volume.
The group stated that it was investigating an “incident” where investors were only able to trade shares of the FTSE 250 and 100 indices as well as global depositary receipts (a certificate representing shares of overseas companies).
The first time it announced that they were investigating the incident was at 3:26pm – an hour before UK markets closed – and then said that orders for the affected stocks had expired.
Trading in dozens names was halted early due to the glitch, including Asos online retailer, YouGov polling company and drinks manufacturer Fever-Tree. The trading of shares in FTSE Aim, an index that tracks smaller companies was also halted. Moreover, the end-of-day normal auction for the affected names has also been cancelled.
Later, the exchange announced that affected stocks will close at their original prices.
The outage is a blow to the London Stock Exchange which has been struggling this year with new listings due to a global recession. The average daily value of the shares traded in the third quarter was £3.3bn, a fifth less than the previous year.
Last major outage for the trading venue was in 2021, when Eikon Terminals and FXall, its currency trading platform, were all down for 5 hours.
Even though exchanges rarely experience extensive outages, these failures can highlight the reliance of investors on a few key data providers and exchanges to conduct daily trading.
Ion Markets, a financial data group, was the victim of a cyberattack earlier this year. It took weeks for the derivatives industry to get back to normal. In the wake of recent technology incidents, regulators have increased their scrutiny over the industry.
Kristin J. Johnson, Commissioner at the US Commodity Futures Trading Commission said that market structure issues, including consolidation and concentration, need to be reevaluated in light of the cyberattack on Ion.
The LSE Group, which acquired Refinitiv for $27bn more than two and a half years ago, has been focusing on this data and trading company in recent years.
Thursday, the company announced its third quarter trading update. Its gross profit had reached £1.8bn. This was an increase of 8.2 percent compared to last year’s same period.
The third quarter saw a 7.2% increase in revenues from data, to £1.3bn.
The company reported that revenues from equity fell by 8.6%, reflecting “subdued volumes on both the primary and secondary market”.
LSEG closed 1.8 percent higher.