Nasdaq Shutdown: Technical Glitch Closes Exchange for 3 Hours

Thursday, 22 Aug 2013 05:23 PM

By Morgan Chilson

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A Nasdaq trading shutdown lasted for three hours Thursday because of a technical glitch, Bloomberg BusinessWeek reported. Add that to another tech issue at Goldman Sachs earlier this week, and the business publication warned electronic markets had better “shape up or face regulators.”

Nasdaq was back online at 3:25 p.m., after stopping at 12:14 p.m.

“Any brokerage firm gets paid by executing orders,” said Sal Arnuk, who is in equity trading at Themis Trading, according to Reuters. “So yes, we are frustrated, and this hurts us, it hurts the market and it hurts public confidence.”

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Although it’s unclear specifically what caused the issue, Reuters reported that an unnamed source said it was a “data feed issue.” The U.S. Securities and Exchange Commission will monitor the situation.

Reuters listed other trading issues, like a BATS Global Trading shutdown for an hour in early August, as concerns for businesses. As business software analyst Lev Lesokhin was quoted by the news organization, “The frequency of technical issues affecting trading is a wakeup call to business leaders in capital markets. They need to carefully scrutinize the structural integrity of their software systems.”

The SEC has been pushing exchanges to upgrade their regulations compliance.

Adding to stability and reliability concerns are issues like Nasdaq’s recent $10 million fine for how it mishandled the Facebook IPO, and Chicago Board Options Exchange’s $6 million fine for not enforcing short sale regulations correctly.

Although technology may be an issue that needs to be addressed, BusinessWeek pointed out that mistakes were made back in the old days, when the floor’s pits were full of people screaming trades.

“We just didn’t hear about the errors that did occur as they were usually sussed out between two guys in person,” writer Matthew Philips said.

Nasdaq resumed trading smoothly and efficiently.

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Related stories:

Nasdaq Asks SEC for Greater Role in Equity Exchange Supervision

Nasdaq to Pay $10M to Settle SEC Charges Over Facebook Snafu

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