Calculating the cost of downtime is an inexact science. But it’s clear that yesterday’s lengthy trading outage on the London Stock Exchange was a significant financial event unto itself, with losses heasured in missed commissions and the opportunity cost borne by traders who were unable to react to the U.S. bailout of Fannie Mae and Freddie Mac and subsequent Wall Street rally.
There are still few technical details about the outage, according to the Financial Times:
The LSE said the outage – which it called a “Black Swan event” – was caused by problems with the electronic connections that allow traders to place buy and sell orders on the exchange’s trading platform. The LSE was unable to explain the source of the problem but said it had not been caused by a surge in trading volumes. The Johannesburg Stock Exchange, which also uses the LSE’s trading platform, was also forced to halt trading.
The BBC noted that the outage could have competitive ramifications for the London Stock Exchange, which is being challenges by rival trading platforms Chi-X and Turquoise. Reaction from traders and analysts in the UK press reflect the unhappiness of trasders with the LSE. “Traders from Europe and the UK were incandescent with frustration in being unable to execute their deals,” commentator David Buik told The Guardian.