Parts of the City of London were left paralysed on Friday after Bloomberg terminals crashed in an IT meltdown that even forced the government to postpone a £3bn debt sale.
The problems with the terminals emerged as the Asian markets closed and Europe’s opened – at around 8.20am – and potentially affected more than 300,000 traders on financial markets.
The Bloomberg screens are used by traders of government bonds as well as shares and other financial instruments. They are so important that the breakdown prompted the Financial Conduct Authority to monitor the impact on the firms it regulates.
The Bank of England reassured markets it had not been affected, saying it had all the tools needed to ensure financial stability and to provide market liquidity if needed.
According to Fortune, 320,000 people worldwide use Bloomberg terminals, which cost about $20,000 a year. A significant number were affected by the IT problem. Steve Collins, global head of dealing at asset management firm London & Capital, said the breakdown was the worst he had seen in the City in more than a decade.
“I haven’t seen it go down like this for 10 or 15 years,” he said. “Bloomberg is usually the one stable thing; it’s the thing that everyone can’t live without.”
It took the whole of the London trading day before Bloomberg said the situation had been fully resolved, although many terminals were running again around lunchtime.
The UK Debt Management Office postponed its weekly tender of Treasury bills on Friday morning, but in a sign that the City was getting back to normal, it then conducted the debt sale in the afternoon.
Bloomberg blamed a combination of hardware and software failures after City dealers took to Twitter to lament the blackout.
Around 4pm, Bloomberg tweeted: “Service has been fully restored. We apologise to our customers for the disruption.”
The US data provider said there had not been a cyber attack. Bloomberg said: “We experienced a combination of hardware and software failures in the network, which caused an excessive volume of network traffic. This led to customer disconnections as a result of the machines being overwhelmed. We discovered the root cause quickly, isolated the faulty hardware, and restarted the software. We are reviewing our multiple redundant systems, which failed to prevent this disruption.”
Collins said traders at London & Capital were left “twiddling their thumbs” and calls to the Bloomberg helpline went unanswered. “Big banks will pump thousands of orders across Bloomberg, so the outage had quite an effect on the market.”
It was still possible to place orders by telephone, as in the days before computerisation reshaped the City, but it is a more cumbersome, time-consuming process, Collins said. “It was annoying that we lost the facility to trade bonds across the Bloomberg platform. Price discovery took longer, as we had to phone Deutsche Bank and Bank of America and say, ‘make me an offer.’”
Bankers reported that other bond sales had been postponed , with the absence of Bloomberg’s messaging system – chat rooms and a direct messaging service – making it difficult to arrange deals.
“The modern way of getting a trade done is through Bloomberg chat, so without it, traders were a bit at a loss,” said Jasper Lawler of City firm CMC Markets. “Of course there is always a telephone if the deal is urgent.”
Louis Gargour, chief investment officer at the London-based asset manager LNG Capital, told the Wall Street Journal: “We’re flying blind in our office as our principal counterparties are unable to act as market makers, therefore we’re all catching up on admin because there is little else that we can do.”
Technical glitches brought share trading on the London Stock Exchange to a halt for seven hours in 2008 and again in 2011, for four hours, when a new system broke down. Facebook’s stock market debut on Nasdaq in 2012 was marred by technical glitches. Nasdaq, which was fined $10m, blamed “poor design” in the software used for IPOs.
During the disruption, some traders reported that their terminals reconnected briefly before crashing again. .
This article was written by Julia Kollewe and Graeme Wearden, for theguardian.com on Friday 17th April 2015 11.25 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010