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Exchange breakdown may have cost $2b in turnover

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A 45-minute breakdown in the stock exchange's trading system yesterday could have cost $2 billion in share turnover, brokers said last night. Turnover was $8.01 billion, down from an average of $10 billion, said Paul Fan Chor-ho, chairman of the Hong Kong Stockbrokers' Association.

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The exchange - the Hong Kong Exchanges and Clearing - said the breakdown came after the trading system failed to execute an order input by a broker at 10.54am. The result was that some brokers could trade, while others could not.

Henry Law Man-wai, exchange spokesman, refused to reveal the broker or stock involved. 'This order appeared no different to any other. The exchange is still unclear as to why the system could not execute the trade,' Mr Law said. 'We may need to get a technology expert to look into the incident.' The system resumed after the exchange removed the problem order at 11.40am.

Chu Chung-tin, who has operated his own brokerage for nearly 40 years, said he had never come across a similar situation. 'The system was not all down. Some brokers couldn't trade at all, but others could with no problem,' he said.

Earlier, the exchange issued a statement telling brokers the breakdown was because the system was 'in a busy status'. Mr Law said some brokers were able to work during the breakdown because they were not trading the 96 stocks handled by the central processing unit (CPU) which dealt with the problem order.

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Under the stock exchange's trading system, there are several CPUs, with each responsible for different batches of stocks. The CPU responsible for the problem order was too busy trying to execute that order and therefore could not handle any other orders for the 96 stocks it was responsible for, Mr Law said. The terminals of brokers trading the 96 stocks became full of orders so they could not trade the other 600 stocks either, Mr Law said.

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