NEW! Our Hero’s Journey tool can help you with your next step towards financial freedom - click here to try now.
Advertiser Disclosure

Why did the ASX close?

Why did the ASX close?
Image source: Getty Images

Global stock markets have rallied sharply over the last week after news of Joe Biden’s US election victory and encouraging results from potential Pfizer, and most recently Moderna Covid-19 vaccines. But stock traders in Australia who were hoping to capitalise on this market surge were left disappointed after a mysterious system glitch forced the Australian Securities Exchange (ASX) to close shortly after 10am on Monday 16 November.

Plot your path towards financial freedom with our Hero’s Journey tool!

MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.

This tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.

Here’s the lowdown on the ASX closure.

Why did the ASX close?

Initially, the ASX sent out a tweet telling traders that it was pausing trading because of  ‘market data issues’.

But later on, the exchange gave more specifics, stating that ‘a software issue limited to the trading of multiple securities in a single order (combination trading) created inaccurate data’.

The closure of the ASX occurred on the same day that its new equity trading system was due to go live. 

This is the first major outage for the ASX since 2016. Back then, the exchange experienced a major hardware failure that led to the outage of its equity market.

However, the ASX is not the only major exchange to shut down recently because of system issues. Japan’s stock exchanges, including the Nikkei 225 index, had to close on 1 October due to software problems.

The ASX expressed its disappointment over the outage. Managing director and CEO Dominic Stevens apologised for the disruption caused to investors, customers, and other market users. “The outage falls short of the high standards we set ourselves and the standards others expect of us”, the CEO said.

Compare stocks and shares ISAs

If you’re planning to open a stocks and shares ISA, choosing the right platform is important. To help you narrow down the choices, we’ve created a list of some of the top stocks and shares ISAs.

The ASX is the world’s third largest pool of investable funds. It currently has assets worth US$1.7 trillion (£1.3 trillion) under its management.

When will the ASX reopen?

The ASX said that its equity market would remain closed for the remainder of Monday as it worked to investigate and resolve the issue.

It later confirmed that a solution had been found. Normal trading should resume at 10am AEDT on Tuesday 17 November.

What are the implications for the stock market and investors?

The long-term implications of the closing of the ASX remain to be seen. Still, the outage is likely to raise questions about market integrity on the part of the ASX.

Indeed, the Australian Securities and Investments Commission (ASIC) has said in a statement that the outage is of significant concern and that it will be watching to make sure that market integrity is not compromised.  

There has recently been an upsurge in stock market interest from new share market investors across the world who have opened a record number of trading accounts. This is according to the CMC Markets chief market strategist, Michael McCarthy.

Increased interest from new investors can only be good for the stock market in the long run. The main problem, however, is that this is putting pressure on global stock markets and their infrastructure. The ASX closure is perhaps a perfect example.

But as time goes on, I think exchanges like the ASX will have sufficient infrastructure to handle more trading volume. So there’s no need to worry.

Are you making these 3 common investing mistakes?

These all-too-common investing errors can cause you to miss out on the long-term wealth-building power that shares can hold….

To help you side-step these pitfalls, and move forward on your path to wealth-building, we’ve created a free report, “The 3 Worst Mistakes New Investors Make”.

Just enter you best email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.