Yesterday the Australian Securities Exchange (ASX) suffered an outage. As a national institution and a foundation of one of the pillars of wealth in Australian society, it is of obvious importance that it runs efficiently and smoothly. Thus, any time there is an outage, it is always, to put it colloquially, a big deal.
But if you didn't notice any outages or issues of any kind yesterday you wouldn't be alone. See, it wasn't the ASX's share trading mechanisms that were interrupted. ASX investors were able to buy and sell shares as they normally would. Rather, it was ASX24, the exchange's futures and options market, which experienced the issue.
Although derivatives like futures and options are an important part of our financial system, they are not nearly as commonly traded among the general Australian population as shares are. Most retail shareholders (like you or I) would likely go their whole life without buying or selling a derivative. But that doesn't mean they aren't important.
So what happened?
ASX hit by derivatives outage
Well, according to a report in the Australian Financial Review (AFR), ASX24 trading was halted just before 10am AEDT. Trading only resumed at 1.40pm. It was only after 2pm that the ASX's operators confirmed ASX24 was "fully operational, all contracts are open and ASX is operating as normal".
ASX Ltd (ASX: ASX), the company that runs the Australian Securities Exchange, reportedly blamed the outage on a "hardware fault, which has been resolved".
As the article noted, the timing of this outage was rather unfortunate. Over the night prior, the US Federal Reserve released its interest rate decision for March, which is an important event for many derivatives traders, given its impact on global financial markets. What's more, the Fed announced the US's first interest rate increase since 2018.
Not only that, but Australian unemployment data was also released yesterday, at 11.30am to be precise. Due to the outage, derivatives markets could not price these events in properly as they happened.
A "senior executive at a large broker" told the AFR that the outage was "extremely inconvenient". Here's some of what they said:
There was news overnight and employment [data] today and clients wanted to express views and trade, but they weren't able to. Internally, we have people with risk and positions, and they need to hedge and you've got markets moving around.
So not the ASX's finest hour, one could say. But these things do happen from time to time. What matters is that the ASX is now back to full functionality and financial life can go on.
