Last updated: August 5, 2011 8:31 pm

NYSE Euronext outage due to messaging problems

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NYSE Euronext has confirmed that a breakdown in the outbound messaging system from its trading engine was behind Thursday’s 90-minute outage on Liffe, Europe’s second-largest derivatives platform.

The group described the breakdown as a “serious incident” and it came amid heavy volumes as stock markets plunged. It puts further pressure on NYSE Euronext to ensure the reliability of its platforms at its European operations after Thursday’s problem became the sixth glitch in two months.

The latest outage came only three days after the group disclosed previous glitches had arisen in part from high volumes and older software.

The breakdown took place on Liffe’s trading engine, and hit contracts such as euribor, eurodollar, and some FTSE index futures. Separately, prices for the indices of the Paris, Amsterdam, Brussels and Lisbon stock markets were also affected.

Messaging is the lifeblood of the world’s trading systems. A message – whether market data or a trade – is sent across trading platforms and fibre optic cables. As activity is increasingly dominated by high-speed trading and algorithms, the speed of sending and receiving messages becomes critical to beating rivals.

In a notice to members on Friday, Liffe said the cause of the outage was software code that distributed messages from its trading platform to customers, and also “to certain other internal applications that are used to monitor and control the markets”.

A spokesperson for the London Stock Exchange said: “The UK markets are performing normally, and performing as expected.” However, Borsa Italiana, owned by the LSE, was unable to publish the price of the blue-chip index towards the end of the day because of technical problems.

The spate of outages has led NYSE Euronext to assign a task force of internal and external IT experts to make further investigations.

On Tuesday Dominique Cerruti, deputy chief executive and global head of technology, told analysts on an earnings call that glitches in June and July were due to an upgrade to some older software had created some so-called “packet loss”, when the packets of data sent across a computer network fail to reach their destination.

“We have the best experts on our camp and from the vendors to analyse that, and it is this change combined with high market volume and some new behaviours enabled by the new capabilities that we’re offering to members that are triggering some instability in some legacy software that we still run, so that’s what had happened,” he said.

The experts will assess if there are further vulnerabilities in NYSE Euronext’s systems and Mr Cerruti said he hoped to have an answer by the end of the month.

NYSE Euronext is awaiting antitrust clearance for its proposed combination with Deutsche Börse. Shareholders of the two companies have backed the deal, which targets large-scale savings by combining technology, clearing and administrative functions. It also plans a central European market operations hub for cash, derivatives and clearing.

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