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UPDATE 3-Euronext trading hit again by technical problems

15/12/2004 15:41

(Adds background, updates share price)

By Marie Maitre

PARIS, Dec 15 (Reuters) - Share trading on Euronext's exchanges in Paris, Amsterdam, Brussels and Lisbon started more than two hours late on Wednesday, stoking anger among market participants at the second technical glitch in a week.

Stock price quotes began at 1015 GMT in all four centres after Euronext repaired what it identified as an electronic network component breakdown.

The previous outage on Dec. 6 lasted 45 minutes, a delay that Euronext Chief Executive Jean-Francois Theodore attributed to a "small technical issue".

The timing of the mishaps is embarrassing for Euronext, which is widely expected to counter-bid for the London Stock Exchange after arch-rival Deutsche Boerse offered 1.3 billion pounds for Europe's largest equity market.

Traders, some of whom said recently that Euronext seemed to have largely overcome the technical snags that marred its reputation in recent years, reacted to the latest problems with exasperation.

"This is another blow for Euronext's reputation," a trader at an Amsterdam-based broker said. "That this happens just ahead of trading and after important news events doesn't exactly make us smile."

Wednesday's problems weighed on Euronext stock, which traded down 2 percent at 21.60 euros in Paris by 1516 GMT, lagging shares in the LSE and Deutsche Boerse.

Euronext, which was set up in 2000 from the merger of exchanges in Paris, Amsterdam and Brussels -- later adding the Lisbon bourse and UK derivative exchange LIFFE -- completed the merger of all four cash trading platforms in November 2003.

There had been very few technical incidents since then.

Besides Wednesday's delay, some traders also pointed at a lack of information from Euronext.

"We've had a period before when Euronext was constantly hit by technical problems, but at least they informed us in time about resumptions then. Now things seem to be happening without any communication at all," a trader at a Dutch bank said.

A Euronext spokesman declined to comment, saying the company was still gathering information about the problems.

"The number of failures has been relatively low," acknowledged an annoyed Antwerp trader. "But if in two hours we still have technical difficulties, we will be very, very angry. There had better not be a third failure (in a row)."


BAD TIMING

Euronext's technical problems may be taken into account in any bidding war over the LSE with Deutsche Boerse.

Some analysts said that, though two technical incidents in the space of a week was unfortunate, they did not call into question the quality of Euronext's fundamental business.

"(Deutsche Boerse's trading system) Xetra also has had the occasional glitches but it might be less spectacular as it remains localised on the German market while Euronext operates four places," said SG analyst Sandra Bos.

"LSE's shareholding members might in time ask both operators (Deutsche Boerse and Euronext) to provide data on the reliability of their (cash trading) systems but, certainly, some much more important factors will tip the balance in favour of one or the other," she added.

The analyst also said Euronext had a conservative approach to managing technical glitches, preferring to suspend trading on all its cash markets to identify and fix a breakdown rather than let a local problem spread through the rest of its systems.

But the technical glitches will not help Euronext fight off rival bourses like the LSE, which is beginning to gnaw at Euronext's traditional market.

The LSE launched a service to trade large Dutch stocks in May this year, making inroads into one of E