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LSE’s systems stretched to breaking point

Share trading on the LSE apparently went wacky today with the wrong
prices appearing and showing data higher on the day when today’s
session has been lower.  Maybe it’s related to the new systems, MiFID,
algo’s and hedge funds … or maybe it’s because banks were coming
under pressure from the credit crunch once again, with RBS and Barclays
share prices down.  Whatever the cause, it’s bad timing as Chi-x call me every other day to say how great they’re doing.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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Banking as usual is NOT an option

I’ve blogged quite a bit about adapting to change lately, and will continue to do …

  • It may be bad timing, but it is by no means the last time that a European index (see http://business.timesonline.co.uk/tol/business/markets/article2827804.ece ) is going to suffer. The LSE has had to admit their difficulties, but there are many more out there.
    In a post-MiFID world, there are hundreds of new venues where the FTSE, or any other list of stocks can now be traded. Even a small percentage of trading outside the indices’ grasp will matter, as the true picture will be even harder for the algo engines and quant boys to put together as they battle for milliseconds and accuracy of forecasts.
    Adding a venue to compare prices adds vital milliseconds and confuses the “apples to apples” comparisons which are required to make trading models profitable. Furthermore, if the FTSE is relying on the LSE only, what happens when the other 187 venues carry a significant percentage of the trading volumes? This is the real impact of trading moving to other venues like chi-x.
    This is not a regulatory issue. We are starting to see the customer’s new ‘bill of rights’ in action. MiFID requires us all to ‘know our deals’ in much greater detail. Advisors will do well to ask tough questions like “Why has my index tracker savings product dropped in value?” sooner rather than later.
    Of course, there are many such questions. Did you know that:
    • Best execution policies may now need to consider up to 188 official execution venues including 85 MTFs and a list of 13 (and growing) SIs?
    • The number of liquid shares on CESR’s database has dropped 49% since 1 October and that half of that occurred on Halloween?
    • There are 44 ways MiFID rules can be varied without passing new laws?
    • 77% of member States have signalled their intention to apply trade reporting requirements beyond equities?
    JWG-IT have defined 16 key measures to help navigate the way over different terrains and have a short, sharp breakfast briefing on 21-November (8.30-9.30) on this subject (visit http://www.jwg-it.eu to register)