Computer glitch on ASX forces companies to clam up

THE corporate regulator will review the second significant computer glitch in a year at the Australian Securities Exchange after the one that occurred yesterday had companies unable to make market announcements for nearly four hours.

By InvestSMART · 10 Oct 2012

By InvestSMART ·
10 Oct 2012

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The ASX kept the market open during the announcement outage, allowing trade to continue.

But trade was halted in 23 companies that issued price-sensitive announcements while the system was unavailable. Among those were Arrium - which has been the focus of attention after receiving a takeover offer last week - and Quickflix.

The ASX defended its decision to keep the market open. A spokesman, Matthew Gibbs, said: "The market was trading on an equally informed basis."

No company announcements were published on the exchange between 12:11pm and 3:56pm, with the backlog of announcements expected to be published last night.

The Australian Securities and Investments Commission was kept updated throughout the afternoon, the ASX spokesman said.

"As a precaution, any stocks with market-sensitive announcements to release have been placed in a halt to prevent any disorderly or uninformed trading," he said.

An ASIC spokesman said the regulator "monitored the situation throughout the outage".

"As part of its supervisory role, ASIC will review all aspects of the outage, including the causes and the ASX's handling of the situation.

"ASIC notes where a price-sensitive announcement was received, the stock was put into pre-announcement trading halt. ASIC regarded this as appropriate."

Traders were not able to exploit the situation by switching to the alternative market provider Chi-X, as companies are listed only on the ASX.

"When companies release information to the market, they only do it to the ASX, so no one's getting that price-sensitive information," the ASX spokesman said. Trading continued as normal otherwise.

"The bulk of companies were outside the main index and all were kept informed throughout the afternoon."

Companies that did not issue price-sensitive announcements were unaffected.

The glitch follows an outage last year that put the entire market on hold for several hours due to a technology issue, adding to investor turmoil as it came in the middle of European-led global market volatility.

A subsequent investigation found it had been triggered by a weekend upgrade to ASX's operating system, which later resulted in software problems. This led to the main trading and back-up system freezing between 10am and 2pm that day.

Yesterday's issue overshadowed a buoyant day for the market, which closed above the 4500-point barrier for the first time since July last year.

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Frequently Asked Questions about this Article…

What was the ASX computer glitch and how did it affect market announcements?

The ASX experienced a computer glitch that prevented any company announcements from being published on the exchange between 12:11pm and 3:56pm. Although trading stayed open, 23 companies that tried to release price-sensitive announcements were placed in trading halts and their backlog of announcements was expected to be published later that night.

Why did the ASX keep trading open during the announcement outage?

The ASX decided to keep the market open, saying the market was trading on an equally informed basis. It also placed any stock with a market-sensitive announcement into a pre-announcement trading halt as a precaution to prevent disorderly or uninformed trading.

Which companies were specifically mentioned as being affected by the outage?

The article named Arrium and Quickflix among the 23 companies that had trading halted after attempting to issue price-sensitive announcements. Arrium had recently been in the spotlight after receiving a takeover offer the previous week.

Did the outage allow traders to exploit the situation via Chi-X or other venues?

No. Traders could not switch to Chi-X to access the announcements because companies release price-sensitive information only to the ASX, and those announcements were unavailable during the outage.

How long did the ASX announcement system remain unavailable?

No company announcements were published on the ASX between 12:11pm and 3:56pm, and the backlog of announcements was expected to be published later that night.

Will regulators investigate the ASX outage and its handling of the situation?

Yes. The Australian Securities and Investments Commission (ASIC) monitored the outage throughout the afternoon and said it will review all aspects of the outage, including the causes and how the ASX handled the situation. ASIC also noted that placing stocks into pre-announcement trading halts was appropriate where price-sensitive announcements were received.

Has the ASX had similar technical outages before?

Yes. The article notes a significant outage last year that put the entire market on hold for several hours. That incident was later linked to a weekend upgrade to the ASX operating system that caused software problems and froze the main trading and back-up systems between 10am and 2pm.

What was the market impact on the day of the outage and what can everyday investors learn?

Despite the announcement outage, trading otherwise continued and the market closed on a buoyant note, finishing above the 4500-point barrier for the first time since July last year. Everyday investors should note that the ASX used trading halts to prevent disorderly trading and that regulators will review outages to help protect market integrity.