Digger Driver Blacks Out Hong Kong's Futures Market

by Mary Swire, Tax-News.com, Hong Kong

29 May 2002

Today's high-tech market universe, in which traders, investors and brokers seem to operate in a virtual, electronic world that exists independently of the real, physical world - until a digger driver has one drink too many at lunchtime and slices through an armoured cable, that is.

Yesterday it happened in Hong Kong, and the split second of lower voltage that resulted before emergency power systems cut in was enough to bring down the SAR's futures and options trading platform when the exchange's derivatives platform backup system failed to take over. The system broke down at 3.12 pm and was recovered by 4 pm, but Hong Kong Exchanges and Clearing decided not to reopen the market, lacking the requisite 30 minutes' notice of market opening - the market normally closes at 4.15 pm.

Investors were forced to hold positions overnight for the second time in six months. Luckily it was a slow trading day, with US markets closed for Memorial Day and the Hang Seng very quiet as a result. When a similar outage took place last December on a busy Friday, investors had to hold their positions over the weekend.

There were animated complaints from day traders and arbitrage traders; other market back-up systems worked correctly, and HKeX will have to look urgently at why the derivatives' platform is especially vulnerable.

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