The London Stock Exchange suffered an outage for the majority of the day today, a day after the news about the US government seizing control of Fannie and Freddie. There is never a good time for an exchange to have an outage, but today is just about the worst possible day for this to occur. No meaningful details are available yet from the LSE to pinpoint what caused the outage.
The UK Financial Services Authority, in its Financial Risk Outlook 2008 report, says the risk of such infrastructure failures is growing with the rise of electronic trading and straight-through processing.
There has been much written on this topic among financial analysts, as the rate of data growth has been greater than the rate of infrastructure improvements for several years across all market participants (buy side, sell side, exchanges, market data vendors, etc.). Trading outages hit investment banks much more frequently than they do at exchanges, but banks have the fortune of not becoming headline news.
The LSE may catch the wrath of traders today, but they will find solidarity with many financial infrastructure technologists that lay awake at night worrying about some set of dominos bringing the same fate upon their firms.
What do you think: is this a blip or likely to be more common as existing infrastructures crest their high water marks more frequently in coming months?