The PJ Tatler

Unknown Technical Glitch Shuts Down Nasdaq

A mysterious technical malfunction forced the suspension of trading on the Nasdaq stock market, forcing traders to pull orders and officials to scramble to get the exchange up and running with as little disruption to the markets as possible.

Officials informed traders that the exchange would reopen at 3:25 Eastern time

Wall Street Journal:

The second-largest U.S. stock exchange had earlier hoped to reopen at 1:50 p.m., a person familiar with the matter said. The exchange said in a notice to traders that it wouldn’t cancel open orders, but that customers could do so.

The outage froze prices on thousands of stocks, exchange-traded funds and options listed on Nasdaq and prompting other trading venues to stop trading those securities. Dark pools and other electronic trading platforms were also forced to suspend trading in Nasdaq-listed stocks, since there were no publicly quoted prices on those securities, traders said.

Nasdaq-listed stocks represented about 28% of all shares traded so far this month, according to data from BATS Global Markets Inc. Nasdaq listings include some of the most prominent companies in the world, including Apple Inc. AAPL -0.28% and Microsoft Corp.

“It’s really shocking. We’re stuck,” said Ramon Verastegui, head of global engineering and strategy at Société Générale. “If we want to trade Apple, we can’t.”

Some traders said there was confusion about what stocks were affected, and that phones were lighting up across trading desks as investors tried to figure out what was happening.

“We’re pulling out our orders to wait until the system works itself out,” Rick Fier, director of equity trading at Conifer Securities. “The best thing clients can do is take a break.”

Security posted outside the Nasdaq MarketSite in the middle of New York’s Times Square would not let anyone in the door without first checking identification or their names against a list of individuals expected for scheduled meetings. Few were seen coming or going.

Others expressed concerns that the prolonged outage could damage investor confidence, and potentially introduce problems with settling the values of indexes and funds at the end of the day. U.S. stocks were up modestly on Thursday afternoon, with the Dow Jones Industrial Average up 62 points to 14960.

The outage has also appeared to affect the Dow as trading slowed noticeably by the beginning of the afternoon. The breakdown was also expected to affect the widely watched stock indices:

The episode meant a widely tracked market gauge, the Nasdaq Composite Index, wasn’t being updated for the first time in memory. The outage was also expected to skew the calculation of other major market measures such as the Dow Jones Industrial Average and the S&P 500-stock index.

Officials aren’t mentioning the “T” word, but financial terrorism wouldn’t be out of the question. More likely, the enormous complexity of systems like the Nasdaq and Dow Jones make bugs if not inevitable, then certainly more likely.

Keep that in mind when Obamacare state exchange websites open on October 1.