A system failure forced London’s Stock Exchange (LSE) on Monday to suspend trading for over seven hours after suffering its third systems glitch in a year and angering customers in one of its most disastrous days. More than double the normal number of shares changed hands in London at the opening bell as details emerged of the US Government’s $200 billion bailout of mortgage giants Freddie Mac (FRE) and Fannie Mae (FNM).

Trading was suspended at 8.45 a.m. and more than five hours later the problem had not been rectified. The LSE said the system had been hit by a “connectivity issue” and kept the market closed for almost the entire session. The market was reopened at 4.00pm, giving traders just 30 minutes to complete deals before it closed at 4.30pm. The Exchange insisted that the problem did not lie with its flagship TradElect trading platform, introduced by the LSE in June ‘07. The Johannesburg Stock Exchange, which also uses TradElect, also suspended trading.

Today’s shutdown is LSE’s worst since April 5, 2000 — when trading on the Exchange was delayed for eight hours. The breakdown also came at an embarrassing time following LSE’s chief executive recent announcement, where she stated that the “introduction of TradElect ensures the Exchange remains at the cutting edge of technology”. (DJ)

Meanwhile, the competition from several new platforms has intensified. This morning LSE’s arch rivals Nasdaq and the NYSE announced they had made A significant step forward with the launch of their European trading system - Nasdaq OMX Europe. The system received approval from UK regulators and will go live on September 26 to trade 25 of the FTSE 100 blue chips, followed by a rollout of 600 stocks by the end of October. The platform expects to have 5% of the market within a year, and 20% in the longer term.

The London Stock Exchange closed nearly 200 points higher.