Outlook: System must work this time

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The Independent Online
These are nail-biting times round at the Stock Exchange, where the credibility of one of the City's less glorious institutions is at greater risk this month than at any time since the plug was ignominiously pulled on Taurus. With two weeks to go before order-driven trading screens are switched on for real, the papers are full of predictably lurid tales of computers throwing wobblies and old-guard stockbrokers predicting it will all end in tears.

It may turn out to be so, but it would be wrong to draw that conclusion from a dress rehearsal in which the Exchange and its member firms deliberately put the new system through an extraordinarily demanding set of paces. It is little wonder, for example, that the computer raised a digital eyebrow when a broker input a request to buy 1 billion shares in a company with fewer than that in issue.

Saturday's trading was unusual, with 60,000 trades in FTSE stocks, rather more than the market normally has to cope with for all shares, and a daily rise of 135 points, which would be one of the highest on record. As a result, the system shut down rather more often than it might be expected to do in a normal day's trading.

There are serious issues to be resolved in the next fortnight, however, and the Exchange would be foolish if it sat down with member firms today with anything other than an open mind. If the system proves too inflexible, shutting down at the slightest whiff of an unusual buy or sell order, dealers will not hesitate in going back to the phone. That would be a disaster, and not just for the Exchange, which cannot afford another shambles. The future of London as Europe's financial centre demands that order-driven trading is made to work.