| November 01, 2007 | -- Currenex Suffers Major Forex Trading Failure
Article from Dow Jones Newswires, by Katie Martin
(The following is extracted from the above article.)
LONDON (Dow Jones) -- Foreign-exchange trading network Currenex last week suffered a major systems failure that left many clients unable to use the system for around five hours.
The State Street Corp. (STT)-owned system stopped working at around 0130 ET, Oct. 24, after several of its key computers shut down, according to an explanation sent by Currenex to some of its users and viewed by Dow Jones Newswires.
System users said they were left stranded after Currenex's backup facilities failed to fill the gap left after some of Currenex's machines broke. In its explanatory note, Currenex said the failure was unacceptable, and said it was a "good lesson" in dealing with such a major problem. The firm was not immediately available for comment Thursday. Clients will be watching carefully to make sure they're prepared for any repeat of this kind of issue.
"For a big software provider like this, it's quite a big thing for not just the primary system to go down, but for the backup to fail as well," Arman Tahmassebi suggested, head of foreign exchange at London-based brokerage IG Markets (IGG.LN), which is scheduled to start distributing foreign-exchange trading network Currenex's services next week.
Tahmassebi said even before this incident, he had already established backup liquidity to pump to his clients in this kind of event. "If our clients can't trade with Currenex, then they always have a fallback to us," he said.
Mikkel Thorup, a currency fund manager at Capricorn FX in Switzerland, who has recently been considering using some of Currenex's services, described this sort of system failure as "scary."
"It has always been our concern that if we link up to one provider and we depend on it, then it can really screw up your business if this happens," said Thorup, who manages $75 million in currency assets.
Currenex doesn't make its trading volumes public, but they are thought to be in the region of $40 billion a day. The system is widely used by hedge funds because of its generally solid reputation for speed and reliability. It also pumps its prices out to distributors under white-labeling agreements. On its Web site, Currenex says technology is at the heart of its business. It claims to "control" its technology and says its service is "designed to ensure there is no single point of failure in any system."
Also on its Web site, it says "by maintaining mirrored systems and databases in different geographic regions of the U.S., Currenex ensures that members can continue trading... in the event a failure occurs." It appears something went wrong Oct. 24, however, prompting some users to think more seriously about using other systems.
"We are working on looking at different alternatives to Currenex, so we're not 100% dependent on one provider," said a client, who asked not to be named. "That's not just because of this problem - the Currenex system is good but it's getting old," he added.
-By Katie Martin, Dow Jones Newswires; +44 (0) 207 842 9346; katie.martin@dowjones.com
Corrected Thursday, November 1, 2007 15:28 ET (2128 GMT)
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