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Regulator reports on 'disruptive and concerning' NZX outages

Regulator reports on 'disruptive and concerning' NZX outages

A severe August 2018 outage was caused by a login error and lasted for more than half a day

An NZX outage in 2018 has been probed by market regulator the FMA.

An NZX outage in 2018 has been probed by market regulator the FMA.

The Financial Markets Authority has reviewed the NZX's technology and found it worthy after two significant outages in 2018.

One of these outages, in August, caused significant disruption.

"While the duration and impact of the significant trading system incident concerns us, we concluded that NZX took appropriate action to address the root causes that led to the outage," the NZX reported in its annual review of the market.

"Based on the information provided by NZX, we consider that the technological resources used by NZX to operate its markets are fit for purpose."

The outage, which began in late morning 28 August, was caused by human error. A user was logged into an incorrect system environment when undertaking a technical operational process, the FMA said.

"When the user entered credentials in a production environment rather than a testing environment, the trading system moved to an enquiry state and all markets stopped trading." 

The impact was significant. 

"NZX attempted to restart market trading at 3pm but was unsuccessful," the regulator reported. "The methods used by NZX to apply trading halts to the different markets affected how those markets transitioned during the attempted restart." 

The cash markets did not resume trading until the next day while the derivatives market resumed trading at 6.10pm.

"During this incident, the trading system was down for more than half of a trading day. The incident had a high level of severity.

"While we acknowledge this is the only incident of such significance for a number of years, an outage of this length is disruptive and concerning."

However, the NZX implemented both immediate and long-term solutions to prevent a reoccurrence of this type of incident.

These actions included: tightening controls around user access to the production environment within the trading system; visual and name convention changes to mitigate misidentification of system environments, and; implementation of maker and checker roles for all incident actions.

The NZX board also gave a good level of attention to the incident and commissioned EY to perform an independent review of IT general controls at market. 

All of EY's finding and recommendations were accepted by NZX.

"Overall, we were satisfied that NZX took appropriate actions to address the August trading system incident," the regulator said.

During the review period, the NZX also continued its project to enhance its market announcement platform that automates publication of data to the market. 

NZX also delivered a custom-built participant portal  during the review period that allows participants to self-submit regulatory information.


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