20 September 2016
by Chris Pash
Australia's share market had a technical meltdown and stocks were left with no official closing prices
The Australian share market yesterday was brought down by technical problems, first delaying the opening by 90 minutes and then grinding to a halt soon after a bumpy restart.
Brokers couldn’t get enough traction in the market to close major trades for clients in the short window that all stocks were available.
Volume was very light with about $1.28 billion in shares traded, or about 20% of last Monday’s turnover, according to CommSec. This is quieter than a normal Christmas Eve or New Year Eve half day trading session.
This evening ASX Managing Director and CEO, Dominic Stevens said security was not compromised and explained a hardware failure was the root cause of the problems.
“What happened today does not meet the high standards of operations and system reliability that we set ourselves, and that our customers should rightly expect of us. We apologise for the disruption,” Stevens said.
“The primary issue arose from a hardware failure in the main database used by the system. This had a number of knock-on consequences that affected the operation of the market. These included a delay to the market open and the decision to close the market early due to ongoing issues that impacted the proper functioning of the trading platform.
“The issues were not in any way related to cyber security. ASX is now focused on ensuring that the market re-opens on schedule tomorrow morning.
“Today, I will be speaking to customers to apologise, and to discuss what learnings we can draw to ensure this doesn’t happen again.”
While the ASX200 index last traded only a couple of points lower than its closing price on Friday, the stuttered opening and the low volumes meant the index moved erratically for the short time it was open, as seen here:
The ASX, itself a listed company, has promised an update to the market ahead of the start of trade today.
One broker said that the tiny amount of functioning trading time for the ASX today, combined with the low volumes ahead of major central bank announcements later this week, made it impossible to fill orders for major clients.
“In total the market’s only been open for about 45 minutes which if you’re working an insto [major bank] order is a real pain in the ass since volumes were already gone anyway with the market sidelined until BOJ & FOMC are done on Thursday,” the broker said.
The outage would have been a particular problem for traders with a mandate to follow the index, such as exchange-traded funds or ETFs, as they would have been unable to follow the price action.
The last prices available didn’t make sense with two of the major banks down and two supposedly higher. Of the big miners, BHP was up a little and Rio Tinto down a bit. Santos gained 3% but Woodside Petroleum lost 1%.
It was the longest breakdown on the ASX since 2011 when trading was out for four hours. The ASX had an outage in August last year, in the middle of the annual results reporting season, due to technical issues.
The ASX said it was working with its technology vendor “to prevent a recurrence”, and later identified the vendor as Nasdaq OMX which supplies the ASX Trade platform based the Genium INET system used by many exchanges around the world.
During the outage, share orders couldn’t be entered, amended or cancelled for both the ASX and alternative exchange Chi-X.
After advising at 1.30pm that all securities were open, shares then slipped back into “enquire” status again about 35 minutes later, meaning trades couldn’t be completed.
At 2.23pm, the ASX said: “The ASX Equities Market has been halted. Further information about market status will be released in due course.”
Ten minutes before the 4pm close, the ASX said: “The ASX equities market will not be re-opening today 19/09. An update will be provided 20/09 prior to market open.”
Chris Weston at IG tweeted: “ASX to remain shut for the day, no closing auction. Equity heads get to the gym early.”
He said that his clients traded other markets. “Equity guys were not seeing much life from corporate news flow or leads from offshore anyhow,” he says. “Let’s hope it’s up and running for tomorrow.”
The day ended with the ASX 200 stuck at 5,294.80, down 1.90 points or 0.04%.