Euronext NV's Optiq integrated trading platform was not the cause of a series of glitches that caused a three-hour trading outage on Oct. 19, CEO Stéphane Boujnah said Nov. 6.
"It's important to note that the issue was not due to a problem in the proprietary code of Optiq, but it was due to a bug in a third-party middleware," Boujnah told analysts at a third-quarter earnings presentation.
Since the outage, which halted trading for the multitude of European exchanges managed by Euronext, banks and investors have questioned the centralization of capital markets operations in Europe in the hands of a single company. This poses unnecessary risks to the market as a technology failure at such a company could halt trading across key European markets, according to the Association for Financial Markets in Europe, or AFME, in a statement given to the Financial Times (London).
Euronext operates the exchanges in Amsterdam, Brussels, Dublin, Paris and Lisbon in Portugal, and it recently acquired a majority stake in Oslo Børs VPS Holding ASA in Norway. The group is poised to take over Milan-based Borsa Italiana SpA from London Stock Exchange Group PLC upon regulatory and board approvals later this year. This will give the group a wide geographic spread and control over most of the key European capital markets.
The series of glitches on Oct. 19 halted trading at almost all exchanges run by the Netherlands-based group, except for Oslo, which runs on a separate technology platform. The glitches caused a three-hour outage and prevented Euronext from closing trading on that date.
This incident was "material" and Euronext's management board "is undertaking a full review of procedures to ensure the smooth running of all operations going forward," Boujnah told analysts. Euronext is dealing with the issue "in a close dialogue with clients [and] regulators" and will take "all the relevant and appropriate measures" both in the short- and long-term, he said.
Nevertheless, the CEO defended the integrated platform approach, saying it is in line with the plans for a capital markets union in the European Union.
"Euronext has invested heavily in technology, capacity, latency and processes. This has allowed us to deliver a platform which is cutting-edge that has been extremely stable and resilient since it was released," Boujnah said. "This platform did an amazing job during the peak of volatilities and volumes in March, April and May. And we believe that it is the backbone of the Euronext project, which is all about building a single liquidity pool, enabled by a single order book, empowered by a single technology platform," he said.
It is important not to lose perspective, he said, stating that the platform works, is efficient and is more stable than some other platforms. This model is exactly what clients want, which is to reduce complexity and cost, and have a deeper liquidity pool. Clients and stakeholders want an integrated market within the EU, Boujnah said.
"The regulators, the policymakers want to build the capital market union and to have a sort of backbone to enable this capital market union. And this is what we are doing," he added.