ASX Seeks Solution to Computer Glitch That Cut Stock Trading by $2 Billion

Australia’s stock exchange said it’s seeking a permanent solution to a computer glitch that halted trading yesterday and cut turnover by more than A$2 billion ($2 billion) from the daily average.

A software issue was responsible for preventing brokers from receiving confirmation messages on executed trades for some stocks, ASX Ltd. said in a statement. Trading resumed today, with no problems reported.

“That was a genuine disaster yesterday and only forgiven because the market did nothing dramatic overnight,” said Sydney-based Angus Gluskie, who manages about $350 million at White Funds Management Pty. “Many investors would have been halfway through the implementation of positions when the system failed.”

ASX, the subject of a A$7.6 billion takeover bid from Singapore Exchange Ltd., halted trading of the entire market at 2:48 p.m. after a problem was discovered in the messaging component of its ASX Trade system. Closing prices were taken from the time operations were suspended.

Technicians have since disabled the so-called Tailor Made Combinations functionality, known as TMC, and are now working on a “permanent resolution,” according to a statement.

‘Not Unique’

“TMC is not unique to this trading system,” ASX spokesman Matthew Gibbs said in a telephone interview today. “It’s just specialized functionality that allows simultaneous trading between two instruments. It doesn’t stop brokers doing anything, they can find alternative means to do the same thing.”

About A$3.27 billion of shares were traded on the ASX yesterday, 43 percent less than the daily average of the past 12 months, according to data compiled by Bloomberg. ASX Trade, which went into operation on the Australian bourse late last year, is powered by Nasdaq OMX Group Inc.’s Genium INET platform.

Nasdaq OMX also has deals to supply Genium-based trading technology to Singapore Exchange and Osaka Securities Exchange Co.

Shares of ASX dropped 1.3 percent to A$35.95 at the 4:10 p.m. close of trading in Sydney, the lowest price since before Singapore Exchange announced its takeover offer on Oct. 25. The benchmark S&P/ASX 200 Index was little changed.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net. Shani Raja in Sydney at sraja4@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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