FTSE in-depth: LSE boss gets off lightly

By Geoff Foster for MailOnline
Updated: 06:38 EDT, 26 February 2011

If Xavier Rolet, beleaguered boss of the London Stock Exchange, is planning to attend Twickenham today to see his countrymen take on England in the Six Nations Rugby tournament, he had better go in disguise.

LSE crash: The embarrassing glitch was apparently caused by a ‘market data issue’

Otherwise he could find himself in the middle of a heavyweight scrum of disenchanted and frustrated City dealers who want to know exactly why the LSE's new trading system crashed yet again yesterday, wiping out the entire morning's business and costing firms millions in lost trades.

A 'late' apology from Rolet which simply said: 'we sincerely regret the inconvenience that today's disruption to trading has caused our customers' left traders livid.

The embarrassing glitch, apparently caused by a 'market data issue', came days after its Italian operations experienced a six-and-a-half hour fault and less than two weeks after its main market moved to a new system, the Millennium IT platform.

When its Turquoise system blew a big fuse last November, the LSE had the temerity then to at first blame 'sabotage'.

Then surprise, surprise, following an internal investigation lasting weeks, it found the incident was the result of human error.

Simon Denham at Capital Spreads yesterday said: 'It's no wonder the LSE is losing market share and this is not good PR for the firm which is in the papers not only for its merger with Canada's TMX but also for the launch of its new pan-European trading platform, Glitches like this do not do our flagship exchange any favours.

'The hope is that any mergers will swiftly address such technical problems. But don't hold your breath!' When trade was eventually able to start at 12.15pm, shares of the London Stock Exchange touched 880p before rallying to close only 0.5p easier at 893.25p.

Traders said Rolet and co deserved to be sitting on a big fall considering the aggravation their systems caused during a fraught session.

Having waited hours to deal and after seeing the price of Brent crude retreat sharply to trade around $111 a barrel, traders decided to close some hefty short positions ahead of the weekend.

The upshot was that the Footsie rallied 81.22 points to 6,001.2. Wall Street advanced 50 points following assurances from Saudi Arabia that it can pump more oil to cover for a fall in Libyan exports caused by the turmoil in the country.

Lonmin was the Footsie's best performer with a speculative gain of 79p at 1829p. Mutter from the gutter suggested that old foe and 24.6% shareholder, Xstrata (23.5p better at 1383p), will soon return with a new cash offer for the world's third-largest platinum producer.

Xstrata abandoned its original £5bn or £33 a share bid in October 2008 after a plunge in metal prices. Xstrata's boss Mick 'The Miner' Davis has since said that he does not want to remain a minority shareholder in Lonmin.

Vedanta Resources rose 92p to 2360p on expectations the Indian government will soon approve its £6bn proposal to take control of Cairn India.

Cairn Energy, 2.4p dearer at 425.6p, agreed six months ago to sell up to 51% of its Indian unit to Vedanta, but the deal has been delayed as the government investigates the issues of royalty payments.

Despite an Arden earnings downgrade, Marks & Spencer improved 3.2p to 351p.

The broker cut its 2010/11 pre-tax profit forecast by 3% from £740m to £718m, ahead of the fourth-quarter trading update on 6th April, citing the tough outlook for High Street trading in the short term.

Speculation that entrepreneur Nigel Wray took a wad of stock in a £2m placing at 20p a share helped media company First Artist Corporation advance 2.75p to 28.75p. Nosey buying saw investor Niche Group up 0.53p to 7.58p.

Anglesey Mining jumped 5.63p to 75.63p after its 41%-owned associate Labrador Iron Mines signed a significant agreement with Tshiuetin Rail Transportation to transport its iron oil from LIM's Scherfferville project.

Vague bid talk and further consideration of the excellent drilling results announced this week by its 42% owned Extract Resources, left Kalahari Minerals 24.75p higher at 246.00p.

Broker Ambrian reckons Kalahari is now looking cheaper than some uranium plays in their peer group.