Paralysed Nasdaq opts for caution over speed in restoring trade.
Thirty minutes into the crippling outage that hobbled the Nasdaq stock market on Thursday afternoon, stopping all trading in $5.9 trillion worth of US equities, exchange officials had the problem fixed.
Another two-and-a-half hours passed, however, before they were ready to flip the switch and turn the all-electronic market back on.
Most of the 191 minutes that the exchange was dark was spent in sometimes frantic conversation with scores of banks, brokers, investment companies and rival exchanges that wanted the Nasdaq's assurance that a restoration of trading would be orderly and not lead to panic. The Nasdaq's first responsibility was to assure "fair and orderly markets," Nasdaq chief executive Robert Greifeld said on Friday on Fox Business Network, and exchange officials worked first to understand and fix the problem and then to communicate with the securities industry to ensure a smooth restart.
"There was active communication going on," Greifeld said.
Meanwhile, banks' trading desks were cautioning Nasdaq, operated by Nasdaq OMX Group, not to rush to reopen, fearing that a restart full of technical errors would only sap more confidence from rattled markets, according to three sources at brokerages and banks who declined to be identified.
In the end, the reopening of trading did go relatively well.
Transactions first restarted at 3:00pm EDT (1900GMT) in a single microcap stock, Atlantic American, a test case picked for its front-of-the-alphabet ticker. Twenty-five minutes later, the rest of the market opened, and, according to a Nasdaq statement, "the trading day finished in normal course."
Shares of Nasdaq itself, which initially fell by more than five per cent when trading resumed, recovered some lost ground to close the day 3.4 per cent lower. The widely-tracked Nasdaq Composite Index gained nearly 1.1 per cent.
Ahead of the start of trading on Friday morning, the Nasdaq said in a system status message that all of its markets, which include options trading platforms such as BX and Nasdaq Options, were operating normally. While worst-case outcomes may have been averted, the outage still is among the most serious in a series of recent technological failures to hit the US securities business, including a software issue at the Chicago Board Options Exchange this spring that delayed the start of trading there for half a day.
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