What caused the ASX outage on Monday trading?

Stock exchange ASX Ltd (ASX: ASX) has confirmed that Monday’s outage was a system error and “not a cyber event or hacking related”.

The ASX advised the Australian Signals Directorate it did not believe the freeze, which shut down ASX share trading for most of Monday, was the result of a cyber security incident.

Nevertheless, the ASX will be required to report and provide full details of the incident to the Australian Securities and Investments Commission (ASIC).  ASIC has described the trading shutdown as a “significant concern and had a significant impact on market participants and investors”, and says that it will investigate if any breaches were made. 

The ASX share price is slightly down by 1.01% today to $81.58.

What happened on Monday?

The outage started within 24 minutes of Monday’s market opening, when the system was frozen at 10.24am Australian Eastern Standard Time (AEST).

The ASX attributed the system freeze to a new trading platform supplied by Nasdaq (NASDAQ: NDAQ). The platform, which has been implemented and tested since January, was “refreshed” on Saturday and scheduled to go live at 2.25am (AEST) that Monday morning.

After investigating, the ASX said the glitch appeared to have been caused by combination orders. It said that the system crashed when market participants submitted combination orders, which are normally used by institutions and professional investors to trade securities in a single order. When these orders were submitted, the software caused inaccurate market data to be recorded on bid and offer prices. The ASX response was to put the market in “enquire status”, which meant all orders were instantly frozen.

ASX chief executive Dominic Stevens apologised for the all-day disruption, saying:

The outage falls short of the high standards we set ourselves and the standards others expect of us. Notwithstanding the extensive testing and rehearsals, and the involvement of our technology provider Nasdaq, ASX accepts responsibility.

ASX disruptions in the past

This is not the first time the ASX has encountered a major disruption of this scale. Only last month, ASX’s new website suffered a glitch at launch, and did not show company announcements.

In a 2016, a hardware failure in the main database used to operate the ASX market triggered a number of events that meant the ASX market did not open at 10am. The market was also closed early that day, and opened as usual the next day.

Two IPOs that were impacted by the glitch

Among those unable to access the ASX’s services on Monday were two companies due to list on the ASX after months of preparation and the successful completion of initial public offerings (IPOs). Native Mineral Resources (ASX: NMR) and Universal Store Holdings (ASX: UNI) said that their debut listings were disrupted, but both remained optimistic that the incident would not hamper the performance of their share prices going forward. 

More reading

• ASIC to investigate if ASX is fit to hold market licence
• ASX trading halt to remain in place for the rest of the day
• Update: Trading on ASX remains in ‘enquire’ state after market data error
• ASX trading has been frozen this morning in IT glitch
• $278m fashion retailer debuts on ASX today

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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