On December 5th, the London Stock Exchange experienced two temporary suspensions of trading involving certain securities. This did not affect trading in the FTSE 100 and FTSE 250 indices, nor the international order book.
The suspensions were caused by the deterioration of disk array performance, leading to a temporary halt in one of the exchange's trading segments.
The first trading halt occurred in the morning due to a delay in data processing. After switching to a backup system, trading resumed. The second incident occurred closer to noon due to problems with another service, but after transferring processes to other equipment, trading restarted.
After each suspension, the securities returned to trading via an auction, but due to technical issues, their status on the exchange boards was not updated in time, creating the impression of their continued suspension. Later, the status was updated to reflect the actual trading situation.
The exchange is also reported to be taking steps to replace the problematic equipment and preparing for normal operations the next day. It is clarified that the reasons for these trading suspensions are different from the previous incident related to software problems in October 2023.
Potential consequences of this disruption for the London Stock Exchange
This malfunction could have serious consequences. Given the recurrence of such disruptions, traders might begin to doubt the reliability of the exchange, which is especially critical for large-sum transactions. If LSE fails to resolve the causes of these problems and ensure their non-recurrence, British regulatory authorities might take strict actions against the exchange.
Continuous malfunctions also raise questions about whether the oldest exchange maintains its high operational standards, as modern investors demand uninterrupted operations from major global stock exchanges. In the event of frequent problems, LSE risks losing investors to other significant global exchanges, such as the New York or Shanghai Stock Exchanges.
EU aims to reduce dependence on UK financial infrastructure
All this occurs against the backdrop of steps taken by the European Union to reduce its dependence on the UK's financial infrastructure, especially in the context of Brexit's aftermath.
Specifically, the EU aims to reduce dependence on London's clearing houses, such as LCH Group of the London Stock Exchange and ICE Clear Europe, as it considers them a threat to Europe's financial stability.
In response, a bill has been approved calling for the creation and use of alternative clearing houses within the EU, as well as the introduction of requirements for maintaining separate accounts at these institutions for use in crisis situations.
These measures, supported by the European Central Bank, have sparked controversy in the financial sector, as they may lead to increased costs and bureaucracy and limit international financial operations.