Bad timing at the LSE

Chi-X chief Peter Randall must be having a field day. Just three weeks ago he warned that the LSE's decision to lower its pricing in advance of plans to upgrade capacity on its shiny new TradElect platform was an accident waiting to happen.

Of course, it may be just coincidence that the LSE systems fell over as traders scrambled to cover their positions in the wake of the US Goverrnment's bail-out of bankrupt mortgage lenders Fannie and Freddie. The London exchange has yet to give an adequate explanation for the problems, but the surge in trading this morning surely points to capacity constraints as a possible cause.

Pity poor Clara Furse, however. The LSE chief took top spot in the FT's letters page today with a rebuttal to an earlier article by Joe Ratterman of Bats trading. "We have been operating an electronic trading engine since the introduction of Sets in 1997, and we recently introduced TradElect to ensure we remain at the cutting edge," she wrote. "The emergence of new trading platforms should test the attractiveness of our services."

The reliance of most players on the LSE as a source of reference pricing limited the fall-out on the day. But the Exchange cannot rest easy.

Chi-X's Randall has compared the TradElect bungling with the failures at Heathrow's Terminal 5. "Longer term it will influence people's decisions about who they're going to fly and what terminals they're going to pass through," he told the FT.