Nasdaq glitch latest technical snafu on Wall Street
The three-hour trading halt due to technical problems forced all exchanges to stop trading Microsoft, Apple and other stocks listed on Nasdaq
The New York Times
NEW YORK — Trading in a wide array of stocks, including Apple and Microsoft, ground to a halt Thursday after a technology problem at the Nasdaq stock exchange. It was the latest prominent disruption in the markets caused by computer glitches.
Nasdaq first sent out an alert at 12:14 p.m. EDT, saying it was halting trading in all stocks listed on the Nasdaq exchange until further notice. The exchange said the issue was a result of problems with the system on which trades are recorded.
Trading was also halted on all Nasdaq options markets.
Nasdaq began reopening stocks for trading soon after 3 p.m. and was racing to get all of its systems back in operation as the trading day drew to a close.
During the halt, nearly every trading firm on Wall Street scrambled to determine what to do with orders for Nasdaq-listed stocks.
“There is no transparency for investors at this point,” said David Warhoftig, managing director of Highside Capital Management. “We were able to potentially get a few trades done when this first started, but now we are not able to do anything.”
Investors were not at risk of losing any money from this type of glitch, said Marty Leclerc, chief investment officer at Barrack Yard Advisors.
“Clearly it’s an annoyance, but it doesn’t in any way affect the value of your underlying assets,” Leclerc said. “Warren Buffett used to say that if you own a stock, you ought to be comfortable with it even if the market were to close for a year.”
Under normal conditions, if an exchange has problems, traders can direct their orders to other public exchanges. But because the problems involved the data feed from which prices are derived, all exchanges stopped trading Nasdaq stocks Thursday.
A day before the incident, there was a total of $48 billion of trading in Nasdaq listed stocks, according to data from BATS Global Markets.
The breakdown appears to be one of the most significant technology problems to hit a trading world that has become accustomed to glitches. Earlier this week, Goldman Sachs sent out a barrage of erroneous options trades that briefly crippled the market.
For Nasdaq, the trading halt has brought back painful memories of the botched debut of Facebook shares in May 2012, a closely watched initial public offering marred by a delayed start and “technical errors.”
Nasdaq paid a $10 million fine as a result of that incident and said it had extensively reworked its technology systems and testing.
On Thursday, traders complained that Nasdaq was providing few details on what had happened and how the problems would be resolved.
Jonathan Corpina, a stock trader at Meridian Equity Partners on the floor of the New York Stock Exchange, said he had many clients calling him “looking for answers and explanations because they can’t get through to the Nasdaq on the phone.”
Nasdaq’s own stock was not trading Thursday afternoon because it is listed on its exchange. That made it hard to immediately gauge how much the outage might hurt the company.
But market participants said there is likely to be significant fallout for the company.
The Securities and Exchange Commission said in a statement: “We are monitoring the situation and are in close contact with the exchanges.”
Brad McMillan, chief investment officer of the independent brokerage Commonwealth Financial, said competition between rival exchanges for customers is partly to blame for recent trading problems.
The exchanges try to bring in more business with the promise of faster trading, which makes them more reliant on new technology.
“The more trading is tied to technology, the more computer crashes matter,” McMillan said.
He was not overly concerned about Thursday’s interruption, recalling a day in August 1994 when a mischievous squirrel caused a brief closure of Nasdaq by chewing into power lines near the stock market’s computer center in Trumbull, Conn.
Material from The Associated Press is included in this report.