Trading Halted in Nasdaq Securities
Large Chunk of U.S. Stock Market Paralyzed by Technical Problem
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U.S. stock exchanges halted trading in all securities listed on the Nasdaq Stock Market because of a technical issue, exchange officials said.
By Jacob Bunge, Kaitlyn Kiernan, Tomi Kilgore
A trading halt on the Nasdaq Stock Market neared an hour after an unexplained technical issue, paralyzing the market for thousands of securities and raising new questions about the robustness of U.S. trading systems following a series of high-profile glitches.
The second-largest U.S. stock exchange expected to resume trading shortly, a person familiar with the matter said just after 1 p.m. ET. The exchange said in a notice to traders that it wouldn’t cancel open orders, but that customers could do so. The exchange would resume trading at a time “to be determined,” the notice said.
The outage saw a large chunk of the U.S. stock market effectively come to a standstill at midday, freezing prices in 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.
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 as 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.”
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.
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. and Microsoft Corp.
“It’s really shocking. We’re stuck,” said Ramon Verastegui, head of global engineering and strategy at Society General. “If we want to trade Apple, we can’t.”
Exchange officials scrambled to resume trading and to figure out what had happened. The issue stemmed from a data feed that provides market data for Nasdaq-listed securities, exchanges said in notices sent to traders.
Regulators said they were communicating with market players but offered no details. “We are monitoring the situation and in are close contact with the exchanges,” said SEC spokesman John Nester.
Nasdaq parent Nasdaq OMX Group Inc. announced the halt at 12:15 p.m. ET Thursday, and other exchanges followed suit. Nasdaq also said it was halting trade in its options markets. A spokesman for Nasdaq declined further comment.
Nasdaq’s announcement came a little more than an hour after NYSE Euronext, operator of the rival New York Stock Exchange, told traders its Arca electronic stock exchange was having technical issues in issues starting alphabetically with ticker TACT through the Z’s.
Arca earlier had problems processing customers’ messages related to some orders among those tickers, it told customers, and said it planned to cancel many currently outstanding orders in the affected securities. Nasdaq said it stopped routing orders to Arca, according to a separate notice.
Thursday’s problem is the latest in a string of technology-related mishaps affecting exchanges and brokers as markets over the past two decades have migrated to electronic systems. System problems marred Nasdaq OMX’s rollout of the Facebook Inc. initial public offering last year, costing Wall Street firms approximately $500 million in trading losses.
Earlier this week, Goldman Sachs Group Inc. flooded U.S. stock-options markets with erroneous orders, most of which were later canceled.
