Thomson Reuters Corp.'s (>> Thomson Reuters Corporation) electronic trading platform, one of the two largest systems used by currency traders around the world, experienced an outage Tuesday.
A system notice sent to Thomson Reuters's clients, and reviewed by Dow Jones Newswires, said the firm's currency matching service was unavailable between 1847 GMT and 2030 GMT (2:47 p.m. EDT and 4:30 p.m. EDT).
"We have identified the cause of this disruption in a third-party database and have made sure extra controls are in place to ensure there is no repeat of this occurrence," a spokesman for the company said in an email.
Despite the global reach of the outage, traders noted little market impact. Many traders instead used back-up systems already in place, while others simply closed down trading on an already quiet session.
"Lucky this happened on a quiet day," said Lanyee Chan, a senior interbank trader at Union Bank of California.
A representative for Thomson Reuters wasn't immediately available for comment.
Even though the trading impact was minimal, some market participants said there could be ramifications for Thomson Reuters itself, which earlier this week completed its acquisition of electronic foreign-exchange trading system FX Alliance Inc. (>> FX Alliance Inc), known as FXall. That purchase was meant to add FXall's client base of asset managers, corporations, hedge funds and others to a largely bank trading service run by Thomson Reuters.
"From Reuters's perspective, the real catastrophic aspect of this isn't lost revenue or damage to reputation, more that they are inadvertently forcing the market to not rely on them," said Erik Lehtis, Consulting Inc., a consultant specializing in FX high-frequency trading, and a former trader.
During the outage, traders at Bank of New York Mellon Corp. (>> The Bank of New York Mellon Corporation) said they were routing their trades through EBS, the other major currency platform.
In July, the most recent data month available, the electronic currencies-dealing system run by Thomson Reuters extended its lead ahead over main rival EBS, a unit of ICAP PLC (IAPLY, IAP.LN) , with its average daily volume outstripping those of its main rival for the 10th straight month.
In July, Thomson Reuters said it had handled an average of $130 billion of trading volumes per day, a 10% fall from June and a 14% drop from the same time last year. But flows were still higher than those on EBS, which saw an average of $106.7 billion per day in the same month--22% below the previous month and some 41% lower on the year.
Some foreign-exchange competitors of Thomson Reuters, which produces news that competes with News Corp.'s (NWSA, NWS) Dow Jones & Co., publisher of The Wall Street Journal and Dow Jones Newswires, said they experienced a slight uptick in volume following the outage.
Charles St-Arnaud, a currency strategist at Nomura in New York, said the outage made it harder to perform transactions on lower volume currencies such as the Mexican peso. He noted that bid-ask spreads--the difference between how much investors are willing to buy and sell a particularly currency pair--were "probably wider than you normally see" due to reduced liquidity.
-Geoffrey Rogow contributed to this article.
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