Nasdaq shutdown: A “technical glitch” caused the second largest American stock market to flat line for approximately three hours Thursday afternoon, sending traders and brokers into a panic, reports Reuters on Aug. 22.
The stability of the exchange, which is increasingly moving to an automated market, is now being questioned after the exchange platform ground to a halt.
“How many times do we have to go through this before someone says this isn’t a very good system?” said Ted Weisberg, a longtime floor trader at the New York Stock Exchange.
At 11:45 a.m. Eastern time, the Nasdaq reported it was experiencing “momentary interruptions” on its quote price availability. Moments later, at 12:14, all activity stopped.
Nasdaq’s web site kept customers informed throughout the day with periodic updates, although no formal cause of the outage was released.
The fault is thought to lie with the exchange’s security information processor, or SIP, which supervises real-time quotes for all open markets.
“When Nasdaq was not interacting appropriately with the SIP, there are dangers in no one knowing what the best price in the market is, so they halted trading,” said equity trader Sal Arnuk.
The increasing automated ability to trade means more potential shortfalls in the system.
“Yes we can trade faster,” said Arnuk. “Instead of trading at a tenth of a second, people can trade at a millionth of a second. What’s the downside? Well, you’ll have more of these issues.”