Wall Street trading in turmoil as Nasdaq market freezes amid glitches
Apple and Microsoft hit for hours in second New York trading mess this week
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Friday 23 August 2013
Trading in some of America's largest companies, including Apple and Microsoft, was halted yesterday afternoon following a technical glitch that paralysed the Nasdaq market, disrupting the exchange for over three hours.
The glitch, an embarrassing set-back for America's second largest stock exchange, occurred shorty after noon. A notice to traders sent out at 12.14pm eastern standard time alerted them to the unusual suspension, telling them that trading in thousands of Nasdaq-listed securities had been halted until further notice.
The outage brought trading in stocks, exchanged-traded funds and options to a complete standstill. NYSE Euronext, the parent company of the New York Stock Exchange, also suspended trading in Nasdaq-listed securities at the request of the troubled exchange, which pointed to a problem in the distribution of quotes. The halt left the Nasdaq composite index stuck at 3631.17. The index eventually began to move again at around 3.25pm eastern standard time. It closed around a per cent higher at 3638.71.
Earlier, the Securities and Exchange Commission, the US market regulator, said it was looking into the problem. Nasdaq OMX, the parent company of the troubled exchange, didn't immediately respond to a request for comment.
The blackout is the latest in a series of high-profile glitches to hit American markets. Only days ago, a glitch was reported to be behind mistaken stock option trades sent out by Goldman Sachs. The Nasdaq exchange, meanwhile, found itself under a harsh spotlight last year over Facebook's listing. Technical problems affecting the social network's market debut led to millions of dollars worth of losses for Wall Street firms, and eventually resulted in the SEC slapping a record $10m fine on the exchange. The regulator blamed the exchange violations resulting from "its poor systems and decision making" during the IPO, one of the most high-profile in recent years. Nasdaq's chief executive, Robert Greifeld, saw his bonus for 2012 cut by over 60 per cent as a result of problems connected to the listing.
Perhaps the most prominent market-wide glitch was in 2010, when a computer error sent the Dow Jones Industrial Average down by some 700 points in a matter of minutes. At one point, the benchmark US stock index was around a 1,000 points lower, panicking investors around the globe.
Stephen Massocca, a managing director at Wedbush Equity Management in San Francisco said the fact that the Nasdaq glitch had occurred in late August, a time when many market participants are on their summer break, meant that it "might have little, if any impact." However, he said it raised questions about the way trading and exchanges were run. "Clearly as we continue to eliminate human beings from the execution of security trading, this is the problem you run into," he told Reuters.
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