Circuit breaker technology halts trading on London Stock Exchange

26 August 2010

A ‘fat finger’ error led to circuit breaker technology halting trading in five stocks listed on the London Stock Exchange, reports have claimed.

Trading in shares in of five firms including BT and United Utilities were stopped due to excessive movement in their pricing.

The share values for each firm moved by over five per cent - shares in BT fell by over nine per cent while the value of stock belonging to United Utilities climbed by a similar amount.

Dr Giles Nelson, deputy chief technology officer at Progress Software, said: “While it’s commendable that the exchange detected and suspended trading in these stocks when the erroneous trades occurred, it should never have reached the exchange in the first place.

“You have to ask the question, how on earth did they make it past the member’s pre-trade risk system, if such a system was even in place or existed?”

‘Fat finger’ errors are attributed to either human mistakes when the wrong figures have been input into a system or when a glitch in a trading algorithm occurs.

Circuit breaker technology was introduced to the US financial markets following the ‘flash crash’ of May 6th.

As much as $862 billion of equity value was lost in a 20 minute period.

By Jim Ottewill

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