LONDON (04/06/2000) - It was a miserable day here yesterday. The morning opened gray and windy, and the London Stock Exchange failed to open at all. The usually austere streets of Europe's trading and finance capital erupted in pandemonium, and the chaos has not fully abated.
A fault in the computer systems that report stock prices kept the Exchange closed for more than seven hours. To make matters worse, the glitch occurred on the final day in Britain's tax year, which also happened the day after the Nasdaq took its now-famous tumble. Moreover, the exchange's failure followed two weeks of disastrous European Internet IPOs (initial public offerings) that had given the lie to glowing reports about the nascent market for tech stocks.
And it came on the heels of a 90-minute outage on Monday that the Stock Exchange had blamed on Reuters; apparently, the wire service's communication systems had been feeding inaccurate stock prices into the FTSE index.
The Financial Service Authority oversees the stock exchange. Its chief, Howard Davies, said today that he was concerned about the way high-tech stocks have increased the pressure on stock exchanges. He said he was also worried about the way a Nasdaq-style volatility has begun to affect European bourses.
"It's like a horse race where all the horses are rank outsiders," Davies said.
"You get people jockeying around wondering whether this one's going to be a winner in this race."
Traders were looking in vain yesterday for a belated April Fools' prankster.
The culprit proved to be a lack of synchronization between two computers, which were spewing forth prices that hadn't been updated. The exchange reopened for trading yesterday at 3:45 p.m., staying open until 8 p.m. as a gesture of apology.
"As a result of today's breakdown, extensive work is being undertaken not only to ensure that the immediate problem has been resolved satisfactorily, but also to take whatever additional steps are required to ensure that the system is robust and reliable for the future," a contrite Gavin Casey, chief executive of the London Stock Exchange (LSE), told the press yesterday.
But the reopening and the reassurance were not enough to stave off public condemnation, and London's financial world was out for blood today. Local papers called on Casey to resign. The Financial Services Authority promised a "prompt and thorough response."
"(The Authority) will work with the LSE, which it supervises as a recognized investment exchange, to ensure that the lessons from the failure to open are learned rapidly and made public, and that any necessary changes to its systems and back-up arrangements are made immediately," the FSA said in a statement.