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Australian Stock Exchange network falls flat on Big Bang anniversary

LSE computerised trading hits 25th anniversary milestone

Network connectivity problems forced the Australian Stock Exchange (ASX) offline for four hours, on the day electronic trading's 'Big Bang' reached its 25th anniversary in London.

The ASX has not given further details of the outage, which was solved this morning by its technology provider NASDAQ, but said in a statement that "a connectivity issue" had caused the problems. It promised "further updates" in the coming weeks.

The outage also came days before ASX faced a new specialist electronic trading competitor, in the form of Chi-X - which is due to open in Australia next week.

Chi-X's Australia chief executive Peter Fowler took the opportunity to tell the International Business Times that if a similar technical glitch had hit Chi-X, it would still trade because of built-in redundancies in its system.

The problem on the ASX was fixed by NASDAQ OMX, which supplies the exchange's technology.

It is not known if NASDAQ's Genium INET trading platform, which the ASX moved to last December, played any part in the problem, or whether it was other networking technology. Genium, which runs on Linux, using C++ , allows the ASX to provide sub-300 microsecond latency on its integrated equities and derivatives exchange.

The problems came on the day the London Stock Exchange - which has experienced its own severe outages - celebrated the 25th anniversary of its 'Big Bang' transition to electronic trading in 1986 as markets were deregulated.

Algorithmic trading has become so fast, with round trip latency on the London Stock Exchange nearing 120 microseconds, that a government panel warned in September that the technology was rapidly replacing human decision making and the right regulations need to be introduced to protect stock markets.

But the Big Bang's deregulation of the markets, and the technological development that ensued, was also providing great benefits to the marketplace, participants have argued.

Tony Moulange, senior business development manager at Colt, which supplies proximity hosting for traders close to the London Stock Exchange, said computerised trading had benefited traders greatly.

Benefits include "greater market liquidity, lower transaction costs and faster access to pricing", he said.

Algorithmic trading continues to grow in popularity, he said. "One thing is for certain, we will begin to see more and more asset classes, such as energy and commodities catching the high-speed trading bug."

But while this growth should be encouraged, he said, "smarter regulation" was also important to protect the markets.


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