August 23, 2013, 9:19 AM — Nasdaq blamed the unprecedented trading halt Thursday on a "connectivity issue" between an exchange participant and its core Securities Industry Processor (SP) system, used to consolidate and disseminate quote and trade information on Nasdaq listed securities.
The connectivity problems degraded the ability of the SIP to disseminate consolidated quotes and trades, Nasdaq said in a statement. It added that the cause of the problem has been identified and addressed.
The NASDAQ OMX Group today halted trading on all Nasdaq-listed securities at 12:14 p.m. because of the glitch. Trading did not resume until after 3:10 ET.
The outage affected more than 2,000 companies including Google, Amazon, Microsoft and Cisco. The Wall Street Journal's Market Watch described the trading freeze as affecting companies with a combined worth of about $5.7 trillion.
The SIP is part of system that enables other exchanges such as the New York Stock Exchange, Chicago Stock Exchange and BATS Global Markets to trade in Nasdaq-listed securities. It is the single source of consolidated market data for Nasdaq-listed securities and provides continuous quotes and last sale information from all markets trading in Nasdaq-listed securities.
When Nasdaq ran into the connectivity problem Thursday afternoon it immediately issued a regulatory halt on all trading in Nasdaq-listed securities in order to protect the integrity of the markets, the statement noted.
It went on to add that the technical issues with SIP were identified and resolved within 30 minutes. "For the remaining period of time, NASDAQ OMX, other exchanges, regulators and market participants coordinated with each other to ensure an orderly re-opening of trading in NASDAQ-listed securities," the statement noted.
Trading resumed and finished in normal course at the end of the trading day, Nasdaq said. "NASDAQ OMX will work with other exchanges that are members of the SIP to investigate the issues of today, and we will support any necessary steps to enhance the platform," it said.
This is not the first time that Nasdaq has run into problems with the SIP. In January, the exchange briefly shut down trading while it investigated the cause for stale data on the system. The problem resulted in Nasdaq-listed trades not being recorded in real-time.
The latest glitch comes even as the system is being modified to accommodate two new data sets, which are scheduled to go live in October.
Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan or subscribe to Jaikumar's RSS feed. His e-mail address is firstname.lastname@example.org.
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