Regulator unloads on ASX over buggy IT

In its annual review of the Australian Securities Exchange’s performance, Australian corporate regulator ASIC has criticized the exchanges handling of IT.

On October 27, the ASX suffered an outage that lasted from shortly after the opening bell through to 2pm. The ASX has said only that the outage was due to a “software glitch” which its backups were unable to cope with.

Although the outage occurred during the long process of relocating its data centre from the Sydney CBD to the northern suburb of Gore Hill, the exchange said at the time the move was not the cause of the problem – something which seems to be backed up by a scant explanation given to the Australian Financial Review.

The October 27 incident occurred after the period covered by ASIC’s latest review, which makes its observation that since the ASX launched an upgrade to its NASDAQ Genium-based Trade and Trade 24 platforms in 2010, “there have been nine incidents … which led to varying degrees of unavailability and disruption”.

Three of those issues, which occurred between October 2010 and March 2011, affected all users of ASX Trade, the regulator said, and “led to varying degrees of market outage”.

“Due to the number of incidents occurring in such a relatively short time, we had concerns about the robustness of the upgrades and the testing that was undertaken before the decision was made to go live,” the regulator writes.

Those concerns must have been exacerbated by the long outage in October.

The regulator also noted that it had concerns about the exchange’s “deployment resources”, and has imposed a requirement on the exchange to give trader’s greater notice of planned changes, even when the ASX expects those to be minor changes with minimal impact on traders.

The more demanding notice and governance requirements will be on show in short order, with a new “high frequency” trading platform called PureMatch due to go live next Monday. ®