Notice About London Stock Exchange Quote Irregularities

4th Jan '18 by Edward Croft

33 comments 8913 reads

In the last 2 weeks there have been numerous price quote irregularities on London Stock Exchange listed stocks - sometimes with quotes incorrect by large margins - especially at the beginning of the day. We, and many brokers, have been publishing these irregularities which has caused concern amongst private investors.

I wanted to write a quick note to explain:

Explain why this has been happening.
Explain what we, and others upstream, are doing to improve matters.
Give some timeframes for likely resolution.
Ask for your patience while we work these issues through.

Why has this been happening? The London Stock Exchange, in order to comply with new sweeping European MIFID II Regulations that have just come into effect, has split the price reporting of every London listed share price into two separate data feeds. One for "on-book" trades, and one for "off-book/off-exchange" (over the counter) trades. For what historically have always been unique, singular instruments, they have created 2 separate ids and 2 separate channels for every share price quote.

This has caused all kinds of havoc amongst data vendors. At Stockopedia, we were suddenly forced, at very short notice, to accept 2 data feeds (via Thomson Reuters) for every London listed stock and attempt to merge them.

The problem is that the off-book trade data is extremely noisy, and often poorly reported. Some stocks trade off-book in foreign currencies. For example JPEL Private Equity (LON:JPEL) is a share that a lot of subscribers own, and it's flipping between quotes in GBP and USD - but also between minor and major currency units. This is not ideal to say the least as it's messing up standard calculations of things like change on day / percent change on day etc. We're reacting as we can. What's more, sometimes we're receiving the correct price, but in the wrong currency or wrong currency unit.

MIFID II aims to improve the 'transparency' of trade reporting but it seems that this interpretation of the rules is making it much harder for the lay investor to gain clarity on what is going on.

What are we doing? We have been consolidating the two feeds into a single consolidated quote, but the data inconsistencies have been hard to completely clear up. Due to the ephemeral nature of price quotes, it's been hard to isolate whether the issues are coming from the exchange or Thomson Reuters, but…

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Edward Croft

4th Jan '18

We will definitely have it sorted out soon. It's just a matter of time. I'm hopeful that the updates we push in the next 24-48 hours will create a lot more stability, but if that fails, I'm hopeful that Thomson Reuters will when they catch up.

Such a nuisance.

LinnetIC

Hi Ed, Many thanks for explaining the issue, and what you are doing with your team to sort it out. It seems that Mifid II is essentially fixing an issue that wasn't broken in the first place! Good luck with it all.

James RH

Herbie,

Are you referring to the prices in your portfolio or stock page? If portfolio, you can change it to show the bid price rather than last trade price - go to the 'you' button at the top right of the screen, and choose site settings. Last one gives you the option to change it.

I prefer the bid price as this should technically be what my portfolio is worth.

James

Rusty2

Stockpage. On the stockpage it showed YouGov (LON:YOU) 360p +8.8%. Yes in portfolio I have bid price but on fantasy fund you can't have that, so it's going up and down all day long just because of last trade. But in portfolio it is still showing up 8.8% but bid has not changed, unless you know what the bid price was all the time it's difficult to know what is happening with Stockopedia prices.

Nick Ray

As I understand it (which is only vaguely), the goals behind the new reporting rules are that all off-book trades (by organisations over a certain size) must now be reported. Those organisations doing such trades are called "Systematic Internalizers" (SI) and the idea is that any market participant can see everything that is going on.

As part of that, someone has to take all these trades from various places and glue them together. The LSE are doing this through "TRADEcho" which provides an "Approved Publication Arrangement" (APA). (The whole thing is a maze of abbreviations. Some explanation and diagrams here.)

My guess is that during these early stages, some of the SI organisations are feeding incorrectly formatted data into the system (wrong currency or currency unit, etc) and so whenever one of the rogue SIs does a trade it appears in the feed and confuses everyone downstream. (Even in the good old days though, Yahoo would report several stocks with out-by-100 errors so this is not completely new.)

Hopefully there is some mechanism in the system to pick up anomalous pricing and send warnings back to the SI who sent it so that gradually the bugs in the providers' code gets fixed up.

What I don't quite understand though, is why LSE do not merge their on-book trades with the off-book trades into a single feed. Because it seems that everyone downstream is now having to implement that merge functionality separately. Lots of overlap and opportunities to get things wrong.

TimL

Thanks Ed for the announcement and explanation. It's particularly impacting myself due to the erratic nature of the portfolio valuation. Tavistock is one stock whose share price has been ofter erroneous for a while. Keystone Law went public in November but still is not making it into the portfolio entries. I currently refer to ADVFN for share prices. I do wish to clarify that I have found the Stockopedia product very useful, and use it on a daily basis.

Yes - nobody can understand why there isn't a single feed. These are single instruments... one SEDOL/ISIN... they deserve a single quote feed.... but nope, we've got the Tradecho feed plus the old LSE feed.

At least TR are now consolidating all of it again in a single .L RIC (reuters instrument code).

At the moment though, we've been having to merge the newly created .TRE (Tradecho) RICs with the old .L RICs - 2 feeds and too much can go wrong.

I can only apologise. Nobody thinks about private investors (in my opinion)... too much done for the benefit of the big organisations. What people need is clarity.

fundtechinvest

Ed

Thanks for taking the time to give an explanation on this and what is being done to rectify it. It is a sign of great customer service that you have been proactive in detailing what is going on and how it is being resolved.

cmorgan

"Nobody thinks about private investors " - I think you have hit the nail on the head although I question that anything about MIFID is to anyone's advantage (other than techies and lawyers). For instance having to pay separately for research has restricted the research available to investors of all stripes which clearly does nothing for market efficiency/price discovery. MIFID as a whole, coming on top of RDR, is / will be driving investors towards passives in turn making the market less efficient and the increased costs resulting from MIFID/RDR are denying advice to those who most need it. While intentions may be good the result is a horse designed by committee, ie a camel. I feel for you Ed!

prem14

Thanks for the info - much appreciated. Fyi , stock price , market cap etc of Fusion Antibodies (LON:FAB) are way out of order. It can't possibly be a billion pound business currently.

jules2k6

Thak you for the explanation Ed

5th Jan '18

We put in some patches overnight which have hopefully solved the vast majority of the bad quotes some have experienced.

If you do experience an issue - please do use the green button on the bottom right of the site and let us know.

Fangorn

"This has caused all kinds of havoc amongst data vendors. At Stockopedia, we were suddenly forced, at very short notice, to accept 2 data feeds (via Thomson Reuters) for every London listed stock and attempt to merge them. "

Ah one of the unintended consequences of further EU meddling!
Mifid 2 is yet more regulatory burden and will cement Europe's place as the most over regulated, protectionist and anti competitive continent!! Jolly good show!

WarrantStar

For me today, the daily discrepancy between my portfolio value change as calculated by Stockopedia, and as calculated by my stockbrokers, is as bad as ever. I don't know who's share prices are a better reflection of reality. But, what I do know is that Stockopedia have explained the problem and have put in place measures to deal with it. I have no idea what my stockbrokers may, or may not be, doing about it, because they have not made any communication about it.

whitmad

Financial services are not over-regulated, they are inefficiently and ineffectively regulated. Having spent a large part of my career working in investment banks and seen how they operate I have absolutely no trust in the financial services industry. Poor regulation is at least partly a result of excessive political influence by these organisations circumventing and hamstringing regulation, In this particular case, do you you think it is entirely an accidental side-effect that it adversely effects the private investor?

"Financial services are not over-regulated, they are inefficiently and ineffectively regulated."

Horses for course really.

Inefficiently regulated implies both badly regulated & over regulated! If it was"efficient" then it wouldn't be considered over regulated surely. It would be deemed fit for purpose.

Don't dispute that said regulation is inefficient however - such a conclusion is drawn from a similar career experience in financial services- unlike you however not solely Investment Banking side but both IB,IDB and AM - back, middle and front office. Quite an eye opener.

Much of the regulatory problems do indeed result from piss poor regulatory oversight - under the previous Labour Govt. It is also why we had the financial crisis due to lax regulation by Gordon Brown - but Mifid 2 is taking things far too far.

I doubt Mifid 2 will improve the lot of the individual private investor either.

But time will tell.

Lucas

Ed,

thanks for the background.

Could you please elaborate on the current impact of this situation on Stock Ranks? Are Stock Ranks affected in any way or are they relying only on end of day prices which are fine?

thanks,
Lucas

6th Jan '18

Lucas - StockRanks should be unaffected. We are using the official close price for valuation which is in the primary quote currency.

I'm 90% sure that our current quotes fix is working - we had no complaints yesterday - but due to further changes likely from our upstream quote vendor there might be some more turbulence.

If anyone sees an issue - please do report it.

thanks Ed. The Stock Ranks point is very important - glad they are not affected!

fred flintstone

9th Jan '18

I am unable to comment except that it confirms my view that the private investor is always one step behind the big players and that we are only allowed to play to help pay expenses !

Notice about London Stock Exchange Quote Irregularities

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Edward Croft

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