A cyclist passes the London Stock Exchange in this December 2006 file photo. The exchange shut down trading Monday to deal with a computer glitch. - File

Trading on the London Stock Exchange Group PLC was halted Monday because of a computer fault, angering customers at a time that Europe's oldest independent exchange is facing growing competition from new platforms.

Another trading platform, the ICE electronic commodities exchange, was also hit by technical glitches that led to what the exchange anticipated would be a brief shutdown.

The LSE said it had suspended connections to its trading system - meaning that no orders could be entered and no trade executions could occur - after some clients had trouble accessing market data.

The exchange's leading FTSE 100 Index had gained around 3.8 per cent in early trade in response to the US government rescue plan for mortgage giants Fannie Mae and Freddie Mac, signalling the start of potentially one of the busiest trading days of the year.

The index hit 5,440.10 shortly after 9:00 a.m. local time (0800 GMT) before trading ceased.

ICE, which offers futures and contracts for commodities including crude oil, natural gas and electricity, said it had closed its futures and over-the-counter markets after experiencing "technical issues."

ICE scheduled a restart of trading for mid-afternoon.

RESUMPTION UNCERTAIN

At the same time, the LSE said that it was "continuing to establish connectivity" with its customers, but officials were unable to say when normal trading would resume.

"Many European clients are furious," said David Buik, an analyst at BGC Partners."We hear this first hand."

Buik added that the problems could see the LSE "lose a larger share of the cake than would be palatable" as rival exchanges come on line.

The LSE is facing competition from several new platforms, including the investment bank-backed Turquoise, Japanese investment bank Nomura Holding Inc's Chi-X, Nasdaq OMX Inc.'s European platform and Plus Market.

Turquoise, which is supported by nine investment banking heavyweights, has said it aims to grab some five per cent of the LSE's trading base within months of its launch this month, while Chi-X has taken about 10 per cent of the trade in blue chip stocks in recent months.

Nasdaq OMX Europe, which is due to go live later this month, expects to have 5 per cent of the market within a year, and 20 per cent in the longer term.

Dark liquidity pool

To meet the competition, the LSE announced plans in June to create a pan-European trading facility with brokerage Lehman Brothers to offer a 'dark liquidity pool,' a trading platform where banks, hedge funds and institutional investors can trade large blocks of shares in secret. It has also recently cut its commission rates.

In a letter published in the Financial Times on Monday, LSE Chief Executive Clara Furse said that better use of technology had seen the exchange's share of trading in equities exceed 50 per cent.

However, she said the LSE was not complacent in the face of competition.

"The emergence of new trading platforms should test the attractiveness of our services," she said.

James Hughes, market analyst at CMC Markets said that traders were speculating that the system had crashed because of the high volume of trades after the developments in the US mortgage market.

"You would have thought the LSE would have the systems to cope with that sort of thing," he said.

Hughes said that some trades had been taking place between institutions despite the frozen exchange, but added that the lack of central data meant investors were effectively "trading blind."

"People can't get their prices to the LSE and nothing is coming back from there as well, so you can't be sure how accurate they are," he said.

The shutdown is the biggest disruption to trading since mid-2000, when the LSE was closed for eight hours - also due to a computer fault. In November last year, the exchange was forced to extend its closing auction after technical problems left traders without live prices for over half an hour.

- AP