Thomson Reuters Corp.'s (TRI) electronic trading platform, one of the
two largest systems used by currency traders around the world,
experienced an outage Tuesday.
A system notice sent to Thomson Reuters's clients, and reviewed by Dow
Jones Newswires, said the firm's currency matching service was
unavailable between 1847 GMT and 2030 GMT (2:47 p.m. EDT and 4:30 p.m.
EDT).
"We have identified the cause of this disruption in a third-party
database and have made sure extra controls are in place to ensure
there is no repeat of this occurrence," a spokesman for the company
said in an email.
Despite the global reach of the outage, traders noted little market
impact. Many traders instead used back-up systems already in place,
while others simply closed down trading on an already quiet session.
"Lucky this happened on a quiet day," said Lanyee Chan, a senior
interbank trader at Union Bank of California.
A representative for Thomson Reuters wasn't immediately available for comment.
Even though the trading impact was minimal, some market participants
said there could be ramifications for Thomson Reuters itself, which
earlier this week completed its acquisition of electronic
foreign-exchange trading system FX Alliance Inc. (FX), known as FXall.
That purchase was meant to add FXall's client base of asset managers,
corporations, hedge funds and others to a largely bank trading service
run by Thomson Reuters.
"From Reuters's perspective, the real catastrophic aspect of this
isn't lost revenue or damage to reputation, more that they are
inadvertently forcing the market to not rely on them," said Erik
Lehtis, Consulting Inc., a consultant specializing in FX
high-frequency trading, and a former trader.
During the outage, traders at Bank of New York Mellon Corp. (BK) said
they were routing their trades through EBS, the other major currency
platform.
In July, the most recent data month available, the electronic
currencies-dealing system run by Thomson Reuters extended its lead
ahead over main rival EBS, a unit of ICAP PLC (IAPLY, IAP.LN) , with
its average daily volume outstripping those of its main rival for the
10th straight month.
In July, Thomson Reuters said it had handled an average of $130
billion of trading volumes per day, a 10% fall from June and a 14%
drop from the same time last year. But flows were still higher than
those on EBS, which saw an average of $106.7 billion per day in the
same month--22% below the previous month and some 41% lower on the
year.
Some foreign-exchange competitors of Thomson Reuters, which produces
news that competes with News Corp.'s (NWSA, NWS) Dow Jones & Co.,
publisher of The Wall Street Journal and Dow Jones Newswires, said
they experienced a slight uptick in volume following the outage.
Charles St-Arnaud, a currency strategist at Nomura in New York, said
the outage made it harder to perform transactions on lower volume
currencies such as the Mexican peso. He noted that bid-ask
spreads--the difference between how much investors are willing to buy
and sell a particularly currency pair--were "probably wider than you
normally see" due to reduced liquidity.
-Geoffrey Rogow contributed to this article.
Write to Ira Iosebashvili at ira.iosebashvili@dowjones.com, Jacob
Bunge at jacob.bunge@dowjones.com and Nicole Hong at
nicole.hong@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 21, 2012 17:05 ET (21:05 GMT)
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