Deutsche Boerse’s Outage Fuels 35% Volume Crash in German Stocks

Ksenia Galouchko

03 Jul 2020, 12:21 PM IST

(Bloomberg) -- The sudden, hours-long breakdown in Deutsche Boerse AG’s electronic trading system on Wednesday led to a significant drop in volumes across affected markets, adding to the summer lull and leaving some traders frustrated.

Transactions on Germany’s DAX Index tumbled 35% to the lowest level since May 25, according to data compiled by Bloomberg. In Budapest, volumes fell 47% and in Prague the decline reached 66%. The exchanges, along with those in Vienna, Zagreb and Ljubljana, share Deutsche Boerse’s T7 trading system.

The technical glitch lasting about three hours muted market activity during an already quiet trading week, as the U.S. prepares for a public holiday and with many traders away from their screens for summer vacations. It was Deutsche Boerse’s second major malfunction this year as a result of a software issue, leaving market participants wondering whether there could be more.

Deutsche Boerse’s Outage Fuels 35% Volume Crash in German Stocks

“I hope we won’t see a repeat of this breakdown -- such an outage should remain an exception,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM EK in Eppstein, Germany. “Any trader who misses profits will not be amused.”

Some traders were frustrated by the decision to resume derivatives trading, including bund futures, on the Eurex platform 30 minutes earlier than on Xetra, according to Hernandez Sampere.

To be sure, Wednesday’s slump in volumes wasn’t limited to European stock exchanges hit by the T7 trading system’s crash. The FTSE 100 also saw an 8.6% decline in trading volumes, while the drop for the CAC 40 was 7.7%.

“It was the first day of the month and most investors are likely to have done their trades before or at month-end as it was half year-end on Tuesday,” said Matthew McLoughlin, London-based head of trading at Liontrust Investment Partners LLP. “Also, U.S. investors will have a quieter week building up to the fourth of July holiday, so that could have had an impact. I agree that volume could have been made up for in the closing auction, but I don’t think there was demand for it yesterday.”