ASX blames hardware failure for Monday’s technical glitch

Five days after the technical glitch which halted trading on Monday, the Australian Stock Exchange (ASX) blames a complex and unprecedented hardware for the outage. The malfunction caused a complete database failover to the disaster recovery system (DRS).

However, not all parts of ASX Trade successfully connected to the DRS database, according to the findings published on Friday by ASX, reports Sydney Morning Herald. The bourse replaced the failed hardware on Monday night, allowing the market to resume trading on Tuesday, reports Sky News.

The DRS was tested on July 27, says ASX. Federal Treasurer Scott Morrison finds the glitch as “a very unfortunate incident,” while the Australian Securities and Investments Commission is investigating it.

During the down time, ASX placed the market on “enquire” mode, disallowing cancellation or amendment of orders. Chi-X, the rival bourse, could execute new orders at that time but not pick up the slack.

While ASX points to its procedure for the situation, Chi-X found the “enquire” mode restrictive and impractical for stockbrokers with open orders to try and execute the same orders at Chi-X due to the risk of doubling up on positions if the frozen trades would be cleared eventually by ASX. Instead of “enquire,” Chi-X favours the ASX opting for an “adjust” mode.

In response to the Chi-X observations, new ASX CEO Dominic Steven, who was overseas on Monday and returned to the exchange on Wednesday, said in a statement, “ASX does not decide to close the market lightly. Understandably, concerns have been raised on various fronts. However, we make no apologies for following our long-established and well understood protocols nor for exercising our judgement to ensure the market was fair, orderly and transparent. That is ASX's responsibility.”

VIDEO: Tech glitch shuts ASX early

Source: Australian Finance News