Missing full-stop halts NZX trading

By PAUL PANCKHURST

A missing full-stop in a piece of code for a trivial change to a software program reportedly started the chain of events that brought New Zealand's sharemarket to a halt yesterday.

The stock exchange, NZX, pulled the plug on trading at 11.26am.

It reopened at 4.30pm - with brokers rushing to put through share transactions worth more than $35 million in a fevered 30 minutes before the final close.

NZX said a "zero tolerance" policy led to the halt, after a glitch where some trades did not flow through to the shareholder registers at registry company Computershare.

Computershare chief executive Mike Smith called the exchange "perhaps over-cautious", adding: "I don't think the trading system needed to have been down."

Computershare says the problem began with an alteration to computer code to make a minor change - the difference between upper case and lower case lettering - in a message format.

A missing full stop in the updated code led to an unexpected side-effect: the problem found on Tuesday morning, where some share trades were not automatically updating the register's records of who owned what.

After an investigation, and a correction of the error, the unprocessed trades - perhaps in the region of 200 - were "replayed" and business carried on as normal.

However, yesterday morning, it was discovered that a mistake had led to a number of trades - later discovered to be 11 - not being replayed. The exchange decided that the integrity of the market was in doubt - because of the inability to confirm trades against holdings - and pulled the plug.

It later said the move was to confirm "conclusively" that shareholder balances in the RML registry - the biggest of three New Zealand share registers - were correct, client positions accurate, and the messaging process satisfactorily restored.

The missing batch were replayed, the system was checked and the market reopened.

Brokers were philosophical. "Markets around the world fall over from time to time from software problems," said one.

Craig Brown, of Walker Capital Management, said it was disappointing but the integrity of the market was paramount. "At least they decided to shut it down - we should give them a big tick for that."

In a statement, NZX highlighted that the closure was not the result of its technology failing.

It said: "Under the current system of share transfer, NZX is dependent upon the efficient and consistent operation of New Zealand share registries.

"Conversely, in Australia the ASX controls the entire chain of events and information required to ensure that trades can be internally matched against holdings."

That statement comes in the context of negotiations with share registries over NZX charges, plus speculation that the exchange may want to widen its operations to related activities - like registries.