London Stock Exchange – Taurus

Following entry is a record in the “Catalogue of Catastrophe” – a list of failed and troubled projects from around the world.

London Stock Exchange – UK
Project : Taurus (Transfer and Automated Registration of Uncertificated Stock)
Project type : Share trading system
Date : Mar 1993 (filed under golden oldies)
Cost : 
£75M lost by the London Stock Exchange and as much as £400M by other stakeholders

Synopsis :
Efforts to move form paper based stock trading to a computerized system becomes a classic tale of failure. After ten years of effort and millions of dollars spent, the project is abandoned as it becomes clear that the system will never work as planned. Due to the massive growth in share trading in the 1980 the use of paper-based tracking of share ownership and transfer became an impossible task.  Initiated in 1983, the Taurus project was to replace the archaic manual based system with a modern high-speed and efficient computerized one. Helping maintain London’s place as a financial hub, the project would usher in the modern age into a world whose manual processes had hundreds of years of tradition and some very deeply entrenched vested interests.

The Taurus failure is really two failures in one. The first attempt at the project involved the creation of a central database that would act as a hub for the recording of data and the execution of transactions. Requiring a complete change in business process flows, the project in part negated the need for middlemen (registrars) who had traditionally played a role in the share trading processes. This resulted in fierce opposition as it would mean the end to the highly profitable business for the registrars. After 5 years of development and the realization that changing the business processes was a significant technical challenge as well, the design was dropped in 1989. The Stock Exchange then embarked on a difficult search for a design that would be acceptable to all of the stakeholders.

Settled in 1990, the revised design adopted a hub and spoke type system in which the registrars continued to play their part in the transaction flow while still meeting the needs of the other stakeholders involved. The Stock Exchange would act as the hub and each registrar would have their own components that would interface to the hub. This increased the complexity of the project, but negated some of the stakeholder opposition.

The Stock Exchange’s parts of the new design was to be implemented by modifying an existing system purchased from the US. As well as the challenge of modifying the software the Stock Exchange also faced major challenges having British law and regulations changed to support the new business processes that would come into use once the system was live.

Modifying the US system to comply with British regulations and the requirements of the many stakeholders proved to be more difficult than anticipated.  Reports indicate that following requirements gathering as much as 70% of the original system would need to be rewritten. Such significant modification essentially negated the value of purchasing the system and resulted in major challenges developing and testing the software. Implementation dates slipped a number of times to accommodate changes and increased testing activities. After a number of such delays and external audits that suggested the underlying design that had been adopted had become unworkable, the project was eventually scrapped in 1993. Other stakeholders (including the registrars) who had built systems to interface to the London Stock Exchange hub forced to abandon their portions of the system.

Contributing factors as reported in the press:
Attempt 1 failure – Failure to align the differing interests of the stakeholders. Underestimation of complexity. Attempt 2 failure – Design by committee. Lack of effective governance. Poor strategic decision making (purchasing a system that was a poor fit to requirements).

Related story : 

In 2009 the Stock Exchange had to replace another system following system performance concerns.  See  TradElect.

Reference links :

  1. Taking the bull by the horns – UK Independent
  2. Software failure : Management failure – S. Flowers – John Wiley & Sons 1996 – Out of print
  3. Crash – Learning from the world’s worst computer disasters – T. Collins – Simon and Schuster 1997 – Out of print