LCH.Clearnet Ltd., one of the world’s largest interest-rate swap clearinghouse, cited a “major” information technology failure on December 31st of last year. The IT failure affected payment processing in the U.K. and interrupted contingency plans, Bloomberg and the Bank of England reports.
In an annual report published yesterday, the Bank of England said that the London-based LCH.Clearnet restored the systems by “early evening” so payments could return to normal. The firm has begun investigations into the cause and has plans to prevent the failure from happening again.
The tech failure affected operational process, which included payment arrangements. The firm stated to Bloomberg, “The nature of the problem created obstacles to reverting to contingency arrangements and also hindered internal and external communications.”
Clearinghouses — ones like LCH, CME Group Inc., Intercontinental Exchange Inc., Eurex AG, the Depository Trust & Clearing Corp., and the Options Clearing Corp. have increasingly grown more critical to the structures of the financial system, as regulators continue to globally push more trades through their services. LCH also noted to Bloomberg that the incident had been “fully communicated” to regulators, exchanges, members, and clients.
The Bank of England’s report stated that one of their priorities for 2013 is to reduce operational risks, and have an “increased emphasis” on cyber risk.