The FTSE was thrown into disarray on Wednesday after a technical problem at the London Stock Exchange (LSE) disrupted the real-time distribution of stock prices.

The LSE was forced to take the unprecedented step of extending trading by over an hour after a glitch in its real-time data distribution system, Infolect, left traders without reliable prices for the FTSE 100 and all the exchange’s indices. According to the LSE, the system remained operational but “connectivity issues” adversely affected a number of member trading firms.

The problem, which occurred 30 minutes before market close, resulted in the distortion of share prices, however, causing the FTSE to appear to jump by 2%, when in fact it had fallen by 1.3%.

Despite the extended trading window many banks were unable to close out their positions, leaving trading desks with unexecuted orders.

Infolect is the LSE’s real-time data distribution system which pushes share prices out to the member trading firms.

Due to natural latency of distribution systems share prices normally experience some ‘slippage’, Robin Paine, CTO of the London Stock Exchange, told Information Age.

However, excess slippage can constrain the financial market and disrupt trading activity.

Infolect has been built-out during the past four years as part of the LSE’s wider Technology Roadmap Programme, under which the company has dramatically overhauled its mission critical technology infrastructure.

The LSE, which has had to fend off hostile bids from both Macquarie bank and Nasdaq, hopes to promote its new technology infrastructure as a key differentiator, in order compete effectively against a number of emergent European exchanges.

For more, read Information Age’s exclusive interview with Robin Paine, CTO of the LSE

Further reading

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