CBOE reviews hardware, software to prevent trading glitches

CHICAGO Tue Jan 14, 2014 4:51pm EST

CHICAGO Jan 14 (Reuters) - CBOE Holdings Inc is examining hardware and software systems as it tries to prevent any repeat of the shutdowns and glitches that plagued U.S. financial exchanges last year, executives said on Tuesday.

CBOE, owner of the Chicago Board Options Exchange, released details on its efforts after saying in November that it would take unspecified steps to "harden" its trading technology.

"There is an allocated budget to do additional things which we hadn't done last year, and we will stop at nothing to get things exactly the way that we want them, which is 100 percent up time or as close to that as possible," President Ed Provost told reporters at a media gathering.

CBOE had to shut down for a half day on April 25 because of a problem connected to expanding its trading hours. Technology failures forced shutdowns at other U.S. exchanges last year as well, disrupting trading and undermining confidence in the stability of the technological infrastructure for U.S. equities trading.

In September, CBOE participated in a meeting at which Securities and Exchange Commission Chair Mary Jo White asked exchange heads to develop a plan to address technical problems in the wake of a three-hour trading outage in Nasdaq-listed stocks.

To reduce the impact of potential problems with computer hardware, CBOE will move away from using hardware that supports more than one function, Provost said.

"We're going to separate those functions, buy two pieces of hardware and reduce the likelihood that something like that --like a hardware failure -- would go out," he said.

CBOE also has implemented new methodologies of "rigorous software testing to ensure there are no software bugs" that would cause a trading outage, Provost said.

"A year from now we can look back hopefully and say, 'Boy we had that one small outage but that was it,'" he added.

Chief Executive Ed Tilly declined to say how much money CBOE was spending on the efforts. If CBOE suffers an outage, the turnaround time to reopen markets will be faster than it was in April, he said.

"We're talking now minutes instead of hours, which was the norm last year," Tilly said at the media gathering. "That is no longer the norm from CBOE's perspective. It's unacceptable."

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