LDN - Business

Traders eye return to business as usual after cyber outage, issues remain

[July 20, 2024] LONDON/NEW YORK (Reuters) -Trading returned to normal on Friday after a global technology outage hampered operations at financial firms from London to Singapore and New York, although a few residual problems remained, including outages at some JPMorgan Chase automated teller machines.

A software update wreaked havoc on computer systems globally, grounding flights, forcing some broadcasters off air and hitting services from banking to healthcare.

The outage sent ripples through financial markets during Asia and early European trading hours with a number of firms involved in various aspects of the trading process affected.

LSEG Group, which runs the London Stock Exchange, said its Workspace news and data platform, regulatory news service and currency spot and forward prices had been affected by the outage caused by a "third-party global technical issue".

By midday in London, most of those issues seemed to have been resolved. Securities trading on the London Stock Exchange was not affected.

A spokesperson for FTSE Russell, which is part of LSEG, said that they were experiencing an impact to real-time platforms, "which is preventing clients from accessing and receiving data" and affecting its indices.

The European Energy Exchange said in a statement on its website that clients using the Trayport power and gas trading platform were having problems trading "due to infrastructure issues with third-party service provider".

At least six trading sources at oil majors Shell and BP as well as trading house Vitol said operations were affected. BP and Shell did not immediately respond to requests for comments.

Vitol said core trading operations were functioning well though some individual computers and some processes that interface with third party systems were impacted temporarily.

"Friday's global tech outage is an example of an unforeseen event that market participants always fear, but don't frequently think about," said Glen Smith, chief investment officer at GDS Wealth Management.

By the start of U.S. business, normality was returning.

The New York Stock Exchange and Nasdaq said markets were operational and working normally.

Major U.S. banks including Bank of America and Goldman Sachs said they had not seen any major impact on their systems or operations. Citigroup has also not been affected, a source familiar with the matter said.

"The vast majority of our ATMs are operating normally and we are working to restore service to the remaining ATMs as quickly as possible," JPMorgan said. It has 16,000 ATMs across the U.S. and 4,800 branches.

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The headquarters of the European Energy Exchange is pictured during evening light in a centre-of-town high-rise office building in Leipzig, Germany April 25, 2021. REUTERS/Annegret Hilse/File Photo

HURDLES TO ACCESSING SYSTEMS

While there were no confirmed reports of trading difficulties as a result of the outage, some traders earlier said there were signs of disruption at smaller financial institutions.

One London-based trader said several multilateral trading facilities were affected, leaving some clients unable to trade.

Some banks and financial services firms said employees and customers had problems accessing their systems.

"People can't switch their computers on after restarts. Those who didn't restart are doing fine," another trader said.

Schwab had a posting on its website saying: "Due to a third-party, global, industry-wide issue, certain online functionality may be intermittently slow or unavailable. We’re actively monitoring the issue. Phone services may be disrupted and hold times may be longer than usual."

Schwab did not immediately respond to a request for comment.

Barclays reported customers were unable to manage accounts on its digital investing platform Smart Investor. Germany's Allianz said the outage affected the ability of employees to log on to their computers. Banks in South Africa also reported disruptions.

A spokesperson at the Financial Services Information Sharing and Analysis Center (FS-ISAC) said the outages had not had a systemic impact on the financial services industry.

"Core functions, including banking and payment processing, are largely functioning with some scattered effects," the spokesperson said.

Fitch said the latest event would likely increase regulatory scrutiny on IT providers.

"Financial institutions' dependencies on third parties has grown in recent years as part of the ongoing digitalisation of the sector," said Monsur Hussain, Head of Financial Institutions Research at Fitch.

"The economies of scale are compelling, but they can also bring systemic risks."

(Reporting by Karin Strohecker, Sinead Cruise, Ron Busso, Susanna Twidale and Dmitry Zhdannikov in London; Saeed Azhar, Tatiana Bautzer, Carolina Mandl, Laura Matthews, Saqib Iqbal Ahmed, Michelle Price; Writing by Dmitry Zhdannikov and Karin Strohecker; Editing by Arun Koyyur and Megan Davies, Kirsten Donovan)

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