Jun 28, 2013 (LBT) - Sri Lanka's only capital market Colombo Stock Exchange today halted its trading temporarily quoting an Automated Trading System Issue.
Officials said that they found a a mismatch that has arisen in certain client balances displayed on the Automated Trading System (ATS) during the pre-open session (9.00 am - 9.30 am) on 28th June 2013,"
Similarly CSE also issued a statement to market participants and whilst after rectfying the issue market commenced its trading at 1:15 p.m. and closed at 2:30 p.m. as usual.
During the day only one crossing was reported with 1 million Aitken Spence Hotel Holdings (AHUN) shares changing hands at Rs.75 per share at 1:18:01 p.m. just after 3 minuts and a second since market commenced trading.
A total of Rs.265.92 million turnover recorded with 12.7 million shares changing hands via 2,176 trades. All Share Price Index (ASPI) closed at 6135.08 points rising by 23.72 points by a 0.39% and S&P SL 20 closed at 3440.74 points rising by 14.26 points or 0.42%.
Earlier also on September 19th 2011 CSE entirely halted trading for the day quoting a 'technical glitch' for the first time in history soon after CSE switched in to Millenium IT developed Automated Trading System 7 version.
Earlier there were several electronic blunders reported with the latest upgrade (or downgrade as per many stock market analysts) that came to the Colombo Stock Exchange in the name of "ATS 7" system, the market sentiment has been completely destroyed, thousands of investors opined at the time.
And in fact the market had seen considerably low turnover levels apart from few days which recorded large deals and according to analysts it is clearly evident that retailers had turned away from the market due to the problems in lately upgraded system.
“After the implementation of ATS 7 there is hardly anything that could be called as a market” a top Stock market analyst and a fund manager stressed adding that it had resulted in the disappearance of continuous foreign buying as well as local institutional buying since investors do not want to put BUY and SELL quotes on the board as you may get hit for only one share by the end of the day!
Earlier reports say that quote from top sources from the broking industry says that however all these mess was started when Indian male officer and a female officer started providing consultancy services to the CSE few years ago. They had advised the CSE to reduce the minimum lot size to 1 instead of 100 shares purportedly to increase the liquidity to which there was tremendous resistance from the brokers.
"However CEO Surekha Sellahewa and Former Chairman of CSE Nihal Fonseka ignoring this opposition from the brokers went ahead and proposed it at an EGM specially called for passing objectionable proposals.” A stock market analyst said adding that at the EGM the proposal of the CEO and the Chairman was defeated by the member Stock Broking firms.
“Despite this the SEC was got round by these officials to send a Directive to effect the disastrous change. However, the minimum lot size at one was introduced with the new ATS 7 system only few years later on 24 February 2012 due to the inefficient software provider” he added. '
“There is now some speculation among many investors in Colombo as to whether the CSE suspended trading in five securities in August 2010 and introduced Price Bands because the ATS 6 trading system could not cope up with over a Rs.5 billion turnover per day” he pointed out.
“It was in fact evident since latter part of 2010 market continued to have system problems the system crashed one day. “For the first time in Sri Lanka’s capital market history the CSE trading system crashed and the whole market activity was stopped on 19 September 2011” he stressed.
Industry questions why there was no one in the Ministry of Finance & Planning to question about such mismanagement of country’s vital capital market system that is the barometer of the economic activity of the nation. “Nobody took action against MIT or the Management of CSE. "The backups of the system took so long to upload its data back again” said a IT manager from stock broking industry. However later it transpired from CSE sources that a consultant brought in by the CEO of CSE had put the blame on a very senior IT Executive of CSE which lead the IT Executive to resign and join a leading brokering house-Asia Securities.
However later between March to April in 2012 the system was a little bit improved according to sources.
While it was obvious that the ATS6 provided by the MIT to the CSE has expired last 2011 and could not handle large turnover, the question is why did the CSE awarded the contract for a new system to the same vendor without calling for proposals from other software vendors. “It is irrelevant what MIT is doing in other stock exchanges if what they have provided to the CSE is not good enough” an IT Consultant commented. He said that even MIT’s new system at London Stock Exchange had been faced with controversy in Europe in the begining. It is said that there had been a great deal of self-proclamation from the LSE about the wonders of their new Millennium IT system. However, two aspects of the system implementation should give concern:
i) the fall in market share in Turquoise since the migration and;
ii) the needlessly high levels of risk that Xavier Rolet is taking in the project to implement Millennium Exchange on the main market.
The purchase by the London Stock Exchange of Millennium Information Technologies of Sri Lanka was a controversial act taken by Rolet as one of his first moves after taking the helm of the London Stock Exchange according to reports from Europe.
The Millennium system was hitherto unproven in high volume markets, having been sold largely to smaller African and Asian Exchanges. Thus it was with great interest that the system was made to go live on the Turquoise platform (now part of the London Stock Exchange) on Oct. 4th 2010.
The migration from the Central Technology from the Cinnober system to the Millennium one seems to have been successful albeit for some hitches on the first few days day of trading. However, the transition has seen Turquoise’s market share taking a significant hit to an average of about 5.2% from about 7% pre MIT.
Many stock exchanges forget that brokers have to run businesses and that redeveloping their connected trading systems to a new platform involves spending money. Thus, when reaching a decision about as to whether one should spend hundreds of thousands of pounds redeveloping their interface to Turquoise, which only had 7% of the market share behind BATS, Chi-X and the incumbent exchanges, some brokers may well have decided to pull the plug altogether. This may explain the loss of market share in the transition.
(Additional Reporting by Jithendra Antonio)
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