[Infowarrior] - NYSE Glitch Halts Derivatives Trading, Updates

[Richard Forno]

NYSE Glitch Halts Derivatives Trading, Updates

By Nandini Sukumar and Sarah Jones - Aug 4, 2011

http://www.bloomberg.com/news/print/2011-08-04/nyse-says-fault-halted-some-derivatives-trades-equity-index-price-updates.html

NYSE Euronext (NYX) said a computer malfunction suspended derivatives trading on its Liffe market and halted price updates on its European stock indexes for almost an hour as equities plunged the most in 15 months.

Derivatives trading resumed at 6:10 p.m. in Paris and gauges in Paris, Brussels, Lisbon and Amsterdam were suspended from 4:28 p.m. to 5:20 p.m., NYSE Euronext said on its website today. Trading in individual equities was unaffected. The Stoxx Europe 600 Index tumbled 3.4 percent to 243.3, the biggest drop since May 7, 2010, amid concern the global economy is weakening.

“For the system to be down today is a total disaster,” said Lex Van Dam, a London-based fund manager at Hampstead Capital LLP, which oversees $500 million. “This is a really scary market. It’s so busy and for people not to be able to get out of their positions or hedge on today of all days is really terrible.”

NYSE Euronext matches equity trades on its Universal Trading Platform while Deutsche Boerse AG (DB1), with which it’s seeking to merge, uses its Xetra technology and is developing a new system for all its markets. The two exchanges have said they will seek to save more than 51 million euros ($72 million) by having common trading and clearing infrastructure and combining networks. They haven’t said whose systems they will use after the takeover is completed.

Euribor Futures

The Liffe system that went down today halted trading in short-term interest rate derivatives including Euribor futures and contracts based on FTSE indexes. Contracts that passed their settlement time will be settled at 6:30 p.m. Paris time, the exchange said.

Today’s fault was the sixth in less than two months for NYSE Euronext. The company’s equity indexes in France, Belgium, Portugal and the Netherlands didn’t update for almost two hours on July 29 and 3 1/2 hours on July 12.

That followed a June 27 glitch that stopped trading in CAC 40 stocks for more than 45 minutes and two incidents the previous week that delayed the start of trading by an hour in Paris, Amsterdam, Brussels, Luxembourg and Lisbon and halted transactions in the largest Dutch and Belgian stocks.

NYSE Euronext, formed when the operator of the New York Stock Exchange bought Europe’s second-largest exchange in 2007, has cited improving computer systems as a goal of its combination with Deutsche Boerse, first announced in February. The transaction will give Deutsche Boerse 60 percent of the combined entity, while NYSE Euronext Chief Executive Officer Duncan Niederauer will run the organization.

Italy’s FTSE MIB Index also stopped updating today, according to Borsa Italiana, which is owned by London Stock Exchange Group.

To contact the reporters on this story: Nandini Sukumar in London at nsukumar at bloomberg.net; Sarah Jones in London at sjones35 at bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer at bloomberg.net