News / Economy

NASDAQ Paralyzed by 3-hour Shutdown

Electronic billboards reflected in the windows of NASDAQ in New York, Aug. 22, 2013.
Electronic billboards reflected in the windows of NASDAQ in New York, Aug. 22, 2013.
Trading in a large part of the U.S. stock market came to a halt for much of Thursday after an unexplained issue shut down trading of NASDAQ-listed securities, the latest black eye for the U.S. securities trading business.
The abrupt halt shortly after noon caused trading in shares of Apple, Google, Microsoft and more than 3,000 other U.S. companies to stop.
NASDAQ resumed trading at around 3:25 p.m. EDT (1925 GMT), ending a roughly 3-hour, 11-minute shutdown that was the longest in recent memory.
“Any brokerage firm gets paid by executing orders,” said Sal Arnuk, co-head of equity trading at Themis Trading in Chatham, New Jersey. “So yes, we are frustrated, and this hurts us, it hurts the market and it hurts public confidence.”
All traffic through NASDAQ had stopped at 12:14:03 p.m. (1614 GMT), and the exchange and its larger rival, NYSE Euronext's New York Stock Exchange, said all trades executed between then and 12:23:31 p.m. would stand.
Trading in a single stock resumed at about 3 p.m., and other stocks followed. NASDAQ's own stock, which had been up 0.8 percent prior to the halt, traded down as much as 5.4 percent after trading resumed.
NASDAQ blamed a problem with distributing stock price quotes for the shutdown. A source familiar with the matter described the problem as a “data feed issue.”
During the shutdown, trading of shares not listed on NASDAQ continued, but transactions could not be executed on the NASDAQ platform. Options trading was also halted.
“I can't remember this happening in recent memory,” said Christopher Nagy, president of consultancy firm KOR Trading and a former head of trading at TD Ameritrade.
The U.S. Securities and Exchange Commission said it was in touch with the exchanges, with Chairman Mary Jo White overseeing developments from her home office near New York City.
White House spokesman Josh Earnest said President Barack Obama had also been briefed about the disruption.
The interruption means that investors had very limited  market access to trade such familiar names as Apple Inc , Facebook Inc, Google Inc and Microsoft Corp. In all, NASDAQ lists about 3,200 shares.
“As we continue to eliminate human beings from the execution of security trading, this is the problem you run into,” said Stephen Massocca, managing director of Wedbush Equity Management LLC in San Francisco. “These events are going to take place, given the level of automation.”
Technical Glitches

The outage was the latest black eye for NASDAQ, which in May agreed to pay $10 million, the largest penalty ever levied against a stock exchange, to settle SEC civil charges over mistakes in handling the Facebook IPO.
James Angel, a Georgetown University finance professor who also sits on the board of rival exchange operator Direct Edge, said NASDAQ appeared to take steps to ensure that trading reopen in an orderly fashion and with correct pricing.
“We can live with the market being closed for a little bit, but we can't live with bad pricing,” he said. “It's far better to have the market shut down and take its time re-opening, than to have what happened with the Facebook incident... It looks like they've learned their lesson.”
William Lefkowitz, options strategist at National Securities in New York, said options trading in such companies as International Business Machines Corp dried up during the halt. But he said the reopening was “very orderly and liquidity is back to normal. It is almost like it did not happen.”
Thursday's outage was the latest high-profile glitch in U.S. stock markets.
On Tuesday, a technical problem at Goldman Sachs Group Inc resulted in a flood of erroneous orders being sent to U.S. equity options markets.
Two weeks earlier, on Aug. 6, stock exchange operator BATS Global Markets was hit with a nearly hour-long outage.
Last year, a trading blowup at Knight Capital Group Inc was a contributing factor to the eventual sale of that company.
“The frequency of technical issues affecting trading is a wake-up call to business leaders in capital markets,” said Lev Lesokhin, executive vice president of Cast, a specialist in business software analysis. “They need to carefully scrutinize the structural integrity of their software systems.”
Other trading venues were also affected by Thursday's outage, and several “dark pools,” which execute orders anonymously, were forced to stop trading, according to several market participants.
Thursday's outage could cause problems for NASDAQ at the SEC, which has recently cracked down on stock exchanges to beef up their compliance with regulations and make sure they are policing themselves.
White, who joined the regulator in April, is a NASDAQ veteran, having served on its board as recently as 2006.
In June, a month after NASDAQ settled with the SEC over Facebook, the Chicago Board Options Exchange was ordered to pay $6 million to settle SEC charges that it failed to properly enforce short sale rules.
The NYSE last year became the first exchange in SEC history to face a financial penalty after it supposedly gave some customers an “improper head start” on trading information.
In March, the SEC proposed rules to require exchanges and other trading platforms to be better prepared to handle major market disruptions, including those caused by technology glitches. Those reforms are still out for public comment.

You May Like

US, China Have Dueling Definitions of Cybersecurity

Analysts say attribution or or proving that a particular individual or government is responsible for a hack, is a daunting task More

Snowden: I'd Go to Prison to Return to US

Former NSA contractor says he has not received a formal plea-deal offer from US officials, who consider him to be a traitor More

Goodbye Pocahontas: Photos Reveal Today's Real Native Americans

Weary of stereotypes, photographer Matika Wilbur is determined to reshape the public's perception of her people More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Russia’s Syria Involvement Raising Concerns in Europei
Luis Ramirez
October 02, 2015 4:45 PM
European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video Russia’s Syria Involvement Raising Concerns in Europe

European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video First Self-Driving Truck Debuts on European Highways

The first automated semi-trailer truck started its maiden voyage Friday, Oct. 2, on a European highway. The Daimler truck called 'Actros' is the first potentially mass-produced truck whose driver will be required only to monitor the situation, similar to the role of an airline captain while the plane is in autopilot mode. VOA’s George Putic reports.

Video Nano-tech Filter Cleans Dirty Water

Access to clean water is a problem for hundreds of millions of people around the world. Now, a scientist and chemical engineer in Tanzania (in East Africa) is working to change that by creating an innovative water filter that makes dirty water safe. VOA’s Deborah Block has the story.

Video Demand Rising for Organic Produce in Cambodia

In Cambodia, where rice has long been the main cash crop, farmers are being encouraged to turn to vegetables to satisfy the growing demand for locally produced organic farm products. Daniel de Carteret has more from Phnom Penh.

Video Migrant Influx Costs Europe, But Economy Could Benefit

The influx of hundreds of thousands of refugees and migrants is testing Europe’s ability to respond – especially in the poorer Balkan states. But some analysts argue that Europe will benefit by welcoming the huge numbers of young people – many of them well educated and willing to work. Henry Ridgwell reports from London.

Video Botanists Grow Furniture, with Pruning Shears

For something a bit out of the ordinary to furnish your home, why not consider wooden chairs, crafted by nature, with a little help from some British botanists with an eye for design. VOA’s Jessica Berman reports.

Video New Fabric Helps Fight Dust-Related Allergies

Many people around the world suffer from dust-related allergies, caused mainly by tiny mites that live in bed linen. Polish scientists report they have successfully tested a fabric that is impenetrable to the microscopic creatures. VOA’s George Putic has more.

Video Burkina Faso's Economy Deeply Affected by Political Turmoil

Political turmoil in Burkina Faso over the past year has taken a toll on the economy. The transitional government is reporting nearly $70 million in losses in the ten days that followed a short-lived coup by members of the presidential guard earlier this month. The crisis shut businesses and workers went on strike. With elections on the horizon, Emilie Iob reports on what a return to political stability can do for the country's economic recovery.

Video Fleeing Violence, Some Syrians Find Refuge in Irbil

As Syrians continue to flee their country’s unrest to seek new lives in safer places, VOA Persian Service reporter Shepol Abbassi visited Irbil, where a number Syrians have taken refuge. During the religious holidy of Eid al-Adha, the city largely shut down, as temperatures soared. Amy Katz narrates his report.

Video Nigeria’s Wecyclers Work for Reusable Future in Lagos

The streets and lagoons of Africa's largest city - Lagos, Nigeria - are often clogged with trash, almost none of which gets recycled. One company is trying to change that. Chris Stein reports for VOA from Lagos.

Video Sketch Artist Helps Catch Criminals, Gives a Face to Deceased

Police often face the problem of trying to find a crime suspect based on general descriptions that could fit hundreds of people in the vicinity of the crime. In these cases, an artist can use information from witnesses to sketch a likeness that police can show the public via newspapers and television. But, as VOA’s Greg Flakus reports from Houston, such sketches can also help bring back faces of the dead.

Video Thailand Set to Build China-like Internet Firewall

Thai authorities are planning to tighten control over the Internet, creating a single international access point so they can better monitor content. VOA Correspondent Steve Herman reports from Bangkok on what is being called Thailand’s own "Great Firewall."

Video Croatian Town’s War History Evokes Empathy for Migrants

As thousands of Afghanistan, Iraqi and Syrian migrants pass through Croatia, locals are reminded of their own experiences with war and refugees in the 1990s. VOA's Daniel Schearf reports from the town of Vukovar, where wartime scars still are visible today.

Video Long Drought Affecting California’s Sequoias

California is suffering under a historic four-year drought and scientists say even the state's famed sequoia trees are feeling the pain. The National Park Service has started detailed research to see how it can help the oldest living things on earth survive. VOA’s George Putic reports.

VOA Blogs

World Currencies


Rates may not be current.