London Stock Exchange admits blame for April crash

The London Stock Exchange (LSE) performed a spectacular U-turn yesterday by admitting that some traders lost out when its systems collapsed last month. It also hinted that it may pay out compensation to those affected.

Early yesterday morning, the LSE issued a statement which claimed that no trade was lost when its software fell over on 5 April. It explained that the exchange was out of action from 08:00 to 15:45 GMT, but that it ensured "adequate opportunity for business to be transacted" by keeping the market open until 8pm.

But yesterday afternoon, MPs sitting on a House of Commons select committee confronted LSE executives with evidence that questioned that statement. Written statements from HSBC, among others, claimed that small trade orders were closed earlier, at 6:30pm - and that business had been lost as a result.

Confronted with this evidence, incoming chairman of the LSE, Don Cruickshank, backed down, and told the committee yesterday afternoon that he would consider paying out compensation.

In addition, Gavin Casey, CEO of the exchange, admitted that the LSE's decision-making procedures were at fault. It took executives four hours to decide to reboot the trading system - a situation that Casey agreed should not have arisen.

Until now, only LSE's software supplier, Andersen Consulting, has been blamed for the software fault that made the overnight systems over-run, causing a conflict with start-of-day procedures.

But after the hearing, Jim Cousins, Labour MP and a member of the committee, told silicon.com: "They were forced to concede under pressure that there is a case for compensation and accountability at LSE itself. The buck has clearly been passed to the Financial Services Authority [FSA] and this is something that the select committee won't let slip."

The FSA's initial response was to welcome the LSE's explanation of events. But Cousins added: "There's nothing like compensation pay-outs for making sure that this sort of thing really doesn't happen again."