Heavy trading on NZX sparks inquiry into technical problems

Wednesday, 22 April 2020

Trading in the last six days has been abnormally strong.

The stock exchange has apologised for technical issues after struggling under 'unprecedented' volumes of trading in recent days.

Since the outbreak of Covid-19, trading activity has been the highest the NZX has ever seen. It peaked at 112,000 trades last Wednesday, a four-fold increase compared to the 25,000 daily trades it was averaging in January.

NZX chief executive Mark Peterson has apologised for the exchange's technical issues which have come during heavy trading.

'It's effectively what used to be a whole week's trading in a single day,' said NZX spokesman David Glendining.

The exchange said the activity brought with it a surge in trade messaging within the market ecosystem's IT infrastructure, which had been the nub of the problem.

The problems centred on the exchange's clearing and settlement system. Trades had been going through normally, but messaging which checked the share registry before a trade took place and confirmed to brokers after it took place had been not working well.

Many NZX staff are working remotely and 'critical function' staff are alternating between home and the office, but the exchange says this was unrelated to the problems.

Only some brokers used the system, but the exchange said the problems had put brokerage staff under considerable strain, which had flowed through to their customers 'at a time when there was a huge amount of interest – and unprecedented demand – in the New Zealand share market'.

Chief executive Mark Peterson said the exchange took its responsibilities 'extremely seriously' and said EY had been appointed to do an external review of the issue and proposed solutions.

'We appreciate how frustrating this is for participants and their clients. We deeply regret the disruption these issues have caused and solving them is our number one priority,' he said.

The NZX was also reviewing ways to improve its processing, and was setting up an internal committee to canvass solutions and ensure participants and regulators got a say.

Peterson said the NZX had had an upgrade of the trading system in the pipeline since 2019, but Covid-19 had set it back. It was expected to go live later this year and would shift non-settlement functions off the clearing and settlement system.

'These architectural changes are expected to provide sufficient capacity for significant further trading volume growth.'