The LSE’s statement followed an independent report by Ernst & Young into the Stock Exchange’s delayed opening of its main trading systems on 5 April, the last day of the tax year when many investors were trying to crystallise gains and losses in order to cut their tax costs.
Gay Wisbey, FSA director of markets and exchanges, welcomed the moves taken. ‘The exchange’s announcement today sets out the steps it has already taken and will continue to take in a range of areas to ensure that confidence in its systems is reinforced. We will continue to work closely with the exchange to ensure that market confidence is maintained and that investors are adequately protected.’
The report was commissioned to establish the original cause of the problems and to recommend steps to be taken to reduce the risks of a reoccurrence. The LSE fully accepted E&Y’s conclusions and recommendations which found that a combination of circumstances affected the processing of data that occurs at the end of each trading day.
Don Cruickshank, chairman-designate of the stock exchange, said: ‘We very much regret the disruption and inconvenience caused on 5 April. The investigation has identified the series of events that led to the late opening of the market. As a result, additional systems control and managerial measures have been implemented in order to ensure that such a problem should not occur again.’ Andersen Consulting was heavily involved in the installation and maintenance of the system.
Following the investigation, the exchange has taken steps to control software management, revise management of IT systems, review back-up arrangements, and broaden contingency arrangements and improve customer communication.
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