Hoare sums wrong

Hoare Govett has had to rewrite its share trades reporting software system following double-counting problems during the dawn raid on Northern Electric it orchestrated last month on behalf of CalEnergy as part of the US power company's pounds 766m bid for the privatised electricity group.

It was the first time that a dawn raid had been launched on a share that is on the Stock Exchange's new Crest electronic settlement system.

The problems were identified quickly by Stock Exchange officials and Hoare Govett staff who were monitoring the reporting of the raid closely. When the double counting was first highlighted, there were immediate concerns that this might be a Crest-related problem.

However, the trouble was pinpointed to a weakness in the Hoare Govett software. The Crest system's own software problems have already led to delays in expanding the project.

Hoare Govett identified that double counting occurred with its software when a particular transaction had three attributes; it was an agency cross trade, it related to a Crest settlement stock, and it involved different salesmen. Although the double counting could not be immediately reversed, Hoare Govett has rewritten the software and is confident the problem will not recur.

The Stock Exchange has contacted other brokers to ask them to check that their software is capable of dealing accurately with trades in Crest settlement stocks.

When the raid was launched, the first report of shares traded lodged with the Stock Exchange suggested that around 23 per cent of Northern Electric's stock had been snapped up. A few hours later, the figure was corrected to 13 per cent.