Another JPMorgan trading system faced outage amid rout last week

Christopher Dilts/Bloomberg

JPMorgan Chase suffered a breakdown on its institutional stock-trading platform as orders flooded in during last week’s historic market rout.

JPMorgan’s U.S. electronic trading platform experienced an outage at Thursday’s close, impacting a system known as a smart order router, according to a note the bank sent to clients. That system is typically used to process algorithmic trades from hedge funds and decides how and when to send trade requests to different venues.

Another platform that caters to wealth-management clients also broke down Thursday afternoon when the Dow Jones index was in the midst of the worst plunge since 1987, ultimately closing down 10%. The issues on both systems were tied to the overwhelming volume that flooded the platforms. A spokesman for JPMorgan declined to comment.

In the “post-mortem” note sent to clients, JPMorgan said that the excessive volume resulted in “prolonged delay in providing clients with order status and execution updates.” The bank said the issue was ultimately resolved overnight, and said it would contact clients for any required reconciliation.

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Ironically, the bank identified the cause of the issue as a hardware change it put in place to accommodate high volume. Banks across Wall Street have been working to beef up their trading systems as they prepare for a sustained bout of volatility and wild swings in markets buffeted by the spreading coronavirus and the oil-price wars that have wreaked havoc across markets.

SEC Commission Chairman Jay Clayton said Monday that stock markets should continue to operate when asked in a CNBC television interview whether exchanges should suspend trading because of volatility triggered by the outbreak of Covid-19.

--With assistance from Lananh Nguyen.