London Stock Exchange suffered two outages, disrupting trading
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The London Stock Exchange (LSE) suffered two outages yesterday, December 5, causing significant disruptions in trading. Hundreds of small company shares became unavailable for trade during the two incidents, as the exchange had to temporarily halt trading on the FTSE small cap index.
Trading is Paused in London Stock Exchange due to a Glitch. 🚨 Third time this year 😑😑
— Yusuf (@YusufTrader1) December 5, 2023
Two new LSE outages in December
The issue was finally resolved in the early afternoon, but the LSE did not provide an explanation for the disruptions. Whatever happened did not cause outages for the entire exchange, as FTSE 100, FTSE 250, as well as the International Order Book securities, remained available throughout the incident.
The more concerning part is that this was the third day that the LSE has seen disruptions over the past two months. Previously, small-cap stocks trading went down for over an hour in October 2023, followed by the disruption of the FTSE Russell Indexes in November. Now, just as December had started, the small-cap stocks became unavailable once again.
The companies whose shares make up the FTSE small cap index include online retailer Asos, a polling business YouGov, and the drinks maker Fever-Tree. The first outage did not last for long, as the LSE first said that it had started investigating an issue around 9.29 am, and normal trading resumed less than an hour later, at 10.17 am.
However, less than an hour after that, the same stocks were hit by a second outage, once again leaving only the larger shares available for trade. This time, LSE took slightly longer to fix the issues, and it announced that normal trading resumed at 12.43 pm.
#LondonStockExchange suffers third outage in three months: What's happeninghttps://t.co/bDG2ChG4OL pic.twitter.com/OzHH1lL7z3
— Hindustan Times (@htTweets) December 5, 2023
The consequences of the outages
Some have since speculated that the outages might increase the focus on the resilience of exchanges, as well as capital market infrastructure companies. Earlier in 2023, the global derivatives industry suffered a cyber attack on financial data group Ion Markets. The impact was so severe that the entire derivatives sector needed weeks to recover back to normal.
In the wake of the incident, regulators increased the scrutiny of the derivatives sector, as well as the companies’ communications to markets.
The LSE also suffered outages before, in 2021, when they were quite severe. At the time, Refinitiv suffered a five-hour blackout.
It is also worth noting that the London Stock Exchange Group has shifted its focus away from equities over the past few years. Instead, it started focusing more on data since it had developed ambitions to become a financial data firm. The shift in focus came after the exchange realized that it makes around 3% of its revenue from listing and trading cash equities. Alternatively, its data business, which started to go big with the 2019 acquisition of Refinitiv, comprises two-thirds of its earnings.
