BATS Chi-X hardware failure floors Linux share trading platform for entire day

Chief executive of exchange initiates 'forensic' investigation

Trading at BATS Chi-X, the largest Europe-wide electronic stock exchange, was yesterday unavailable for an entire day after a serious hardware component failure knocked out operations on its Linux-based matching engine.

The problem hit the BATS exchange, but Chi-X traders escaped the issue as that exchange's systems have not yet not been integrated - BATS only closed its takeover of the company last week.

Chi-X is likely to be migrated to the BATS platform in the next year, and IT planning is currently underway. The platform runs on a Linux-based datacentre and is hosted by Savvis - with servers in London's Docklands for European traders, and in New Jersey for the US.

The problem began at 9.36 am yesterday and the company decided to halt trading for the rest of the day.

BATS traders who were affected work for a range of high profile financial institutions, including Citi, Deutsche Bank, JP Morgan, Barclays Capital, Goldman Sachs, HSBC, Nomura, the Royal Bank of Scotland and smaller finance houses.

BATS Chi-X declined to name the specific hardware in question, but said the "responsible" option of stopping trades was taken until the issue was resolved. Similar problems at other exchanges have often come down to network switches or data interface devices, though it has not been confirmed in this instance.

Trading on the exchange has operated normally today.

Chief executive Mark Hemsley said the faulty component was quickly replaced, but that when trade data was checked a number of errors were identified. This prompted the continued stoppage.

"We believe this was the most responsible course of action in order to ensure trade data integrity and an orderly market," he said.

A number of other high profile exchange have experienced serious outages after IT problems in recent years. The most infamous incident was at the London Stock Exchange, where trading was taken offline for an entire day in 2007 following networking problems on its previous TradElect platform. But last year it initially also suffered extensive switchover problems to the Millennium IT system, which is now running successfully.

More recently, both NASDAQ and the Australian Stock Exchange have also had severe outages, after software and network connectivity issues respectively.

Technical issues can have a severe reputational impact on the exchanges, as traders can easily and quickly switch to alternatives to make their trades.

Hemsley today apologised to traders for the issues at BATS. He said the company had begun a "forensic examination" of the problems and would provide more details shortly.

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Tags open sourceRoyal Bank of ScotlandNetworkingsecuritygoldman sachssoftwareoperating systemsCapitaBank of ScotlandIT BusinessDeutsche Bank

More about Australian Securities ExchangeDeutsche BankDeutsche BanketworkGoldmanHSBCJP MorganLinuxMorganSavvis

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