EuroMTS accuses banks of sabotage
By Arkady Ostrovsky - 13 Feb 2000 12:00GMT
EuroMTS, the largest electronic trading system for European government bonds,
on Friday accused two of its bank members of trying to sabotage its system.
Gianluka Garbi, chief executive, said it detected two banks bombarding the
system with fake price proposals in an apparent bid to slow it down. "These
banks are behaving like computer hackers," he said.
EuroMTS's 24 member banks include most of Europe's largest as well as
leading US investment banks.
EuroMTS accounts for more than 30 per cent of all trading volumes in European
government bonds and is the main source of liquidity in the market. It handles
E14bn (£8.6bn) worth of transactions a day.
Mr Garbi said the two banks were sending millions of price inputs into the
system but were not trading on their proposals.
EuroMTS is capable of handling 150 price changes a second and would not
crash, but could be slowed down, he said.
Mr Garbi's charges come on the heels of one of the largest incidents of computer
terrorism. Several top web sites, including portal Yahoo.com, bookseller
Amazon.com, eBay, the leading auction site, and CNN's news web site, came
under similar attacks by hackers earlier this week.
He refused to name the two banks but said: "We have warned those banks and
we would have to expel them unless they change their behaviour. Then everyone
would find out who they are."
Mr Garbi said the actions of one of the banks might be due to it experiencing
serious technological problems, but said the other was undoubtedly abusing the
system to undermine EuroMTS. He said that bank was openly advertising a
system competing with EuroMTS.
EuroMTS is the only electronic trading platform not developed by banks or
proprietary traders. It was developed by MTS, the Italian exchange for government
bonds.
It allows large market makers to trade liquid benchmark bonds electronically
rather than by the more time-consuming and expensive over-the-counter
method.
However, EuroMTS has fierce competition in electronic bond trading.
Rival systems include Cantor eSpeed, which also plans to open its platform to
internet users, and BrokerTech, which is owned by 12 banks, many of them
members of EuroMTS. BrokerTech plans to start trading US treasuries and key
European government bonds this year.
Some observers accuse Euro MTS of paranoia. "They are simply very nervous
about the competition," one market participant said.