February 14, 2011 / 12:02 PM / 9 years ago

LSE goes live with faster UK trading system

LONDON (Reuters) - The London Stock Exchange (LSE.L) moved its main trading platform to a faster system, putting past technology glitches behind it just days after launching a bid to buy Canadian exchange TMX (X.TO).

The British exchange has moved its main UK share system to technology provided by Millenium, a Sri Lankan company it bought in 2009, making it faster and more attractive to the rapidly growing business of ultra-fast hedge fund trading.

The migration on Monday is a boost for the exchange after it announced talks with Toronto-based TMX on February 8. It postponed the technology upgrade in November, when a trading glitch prompted the LSE to probe what went wrong amid speculation of sabotage.

“This upgrade is important for the LSE because they can now go after the market-makers and high-frequency guys who are some of the top trading firms in Europe,” said the head of algorithmic trading at a large LSE customer.

Ultra-fast and secure trading systems are crucial tools as stock exchanges try to attract high-frequency trading (HFT) clients, hedge funds that make profits by dipping in and out of the market in fractions of a second.

The LSE’s talks with TMX were overshadowed when Deutsche Boerse (DB1Gn.DE) announced last week it was in advanced talks to buy NYSE Euronext NYX.N, in a deal that would create the world’s largest exchange group.

The London stock market has been keen to upgrade its systems to compete with the new breed of tech-savvy rivals, such as Chi-X Europe and Bats Europe, which have taken market share by courting the HFTs who like their speed.

The project was postponed by three months in early November when the LSE probed “suspicious circumstances” that led to a second technical glitch on Millennium in less than a month.

The investigation sparked reports of sabotage, but the LSE said later that human error had caused the crash.

LSE rival Nasdaq OMX said on February5 it had contacted the U.S. Federal Bureau of Investigation (FBI) after finding “suspicious files” on its computer servers which could have affected one of its Internet-based systems.

Editing by Erica Billingham

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