Upgrade Halts E-Trading at London Metal Exchange

LONDON—The London Metal Exchange (LME) was hit by a software glitch that prevented electronic trading from taking place on Monday and most of Tuesday last week, confirm officials at the LME.

The failure was caused by the rollout of an upgrade of the LME's Select trading system, which was rolled out over the weekend. "On Monday, we encountered some issues, and decided to close the market in a controlled manner," says a spokesperson for the LME.

The exchange tried trading on the new system again on Tuesday, but encountered the same issues. The LME Select Five platform ran for nine hours on Monday and seven hours on Tuesday.

The LME then rolled back its trading system to LME Select Four "at 1 a.m. on Wednesday," the spokesperson says. "We are still exploring what the issues were and are committed to [fix] what went wrong."

LME Select is based on a customized version of TradExpress Trading Engine from Stockholm-based Cinnober. The exchange also is using the user front end Trading Clients and a new matching and registration system based on Cinnober's TradExpress Trade Manager.

"The Cinnober system is quite light," says Paul Pickup, an IT consultant with Trading Technology. "It comes from Internet technology, and generally speaking, Internet technology put into exchange systems only work with small volumes," Pickup says. "To handle large volumes, the older technology is better." The LME Select Five platform is written in the third-generation Java programming language and is running under Unix, Pickup says.

The unexpected rollback to Select Four could delay the exchange's plans to launch new e-mini contracts in copper and aluminium. However, the LME says the plans are still on track for the launch of these contracts on November 20. The contract relies on functionality only available in Select Five.

Officials at Cinnober decline to comment on the problem and are referring all inquiries to the LME.

Other exchanges that have deployed Cinnober technology include the American Stock Exchange, Borsa Italiana, Chicago Board Options Exchange, Euronext.liffe and Nord Pool, the Nordic power exchange.

The LME first adopted Cinnober's platform in 2003 when it decided to replace its existing OM-based trading system. At the time, a spokesperson for the LME said that "Cinnober was able to offer … a cost savings over the OM solution, and also offered slightly different functionality (Trading Technology Week, July 7, 2003)."

The Cinnober application in use at the LME is running against a Microsoft SQL Server database hosted at a Savvis data center near Reading in the U.K. Savvis also provides a London-based back-up site. Members will connect to the Savvis Financial Xchange network through London hubs via dual lines from different carriers.