Nasdaq boss blames three-hour halt on outsiders
- 23 August 2013
- From the section Business
Nasdaq boss Robert Greifeld has alluded to outside parties to explain a three-hour trading freeze on Thursday.
"We have to be aware that the other person will not always act in the proper way," he told news channel CNBC, admitting that the stock exchange's systems needed to be more robust.
The chief executive said the suspension prevented computerised professional traders getting an unfair information advantage over other investors.
Trading halted from 12:14 to 15:25 EST.
Trading on the other US exchanges was uninterrupted.
Many professional traders have data fed directly into their computers from the stock exchange, while other investors rely on a "consolidated feed" that combines data from all 13 of the US stock exchanges.
Mr Greifeld said Thursday's technical glitch affected the consolidated feed, meaning professional traders might receive sensitive trade data earlier than others.
He specifically mentioned high-frequency traders - financial firms that buy and sell thousands of times a second, using computers to take advantage of tiny price discrepancies between the different stock exchanges.
"We're deeply disappointed with what happened yesterday. We aspire for perfection. We want to get to 100% up-time," he said, while conceding that he could not promise that there would never be a problem.
The chief executive said there was a need for more "defensive driving" - by which he meant that the exchange needed to be able to react better to the behaviour of other financial market participants.
"We have 13 different exchanges, we have hundreds of market participants, we are all interconnected in a number of fundamental ways."
The Nasdaq is the second-largest stock exchange in the US, and the world's largest electronic stock market. It is dominated by major tech stocks such as Apple and Facebook.
Nasdaq said that trades executed between 12:14:03 and 12:23:31 would stand.
But trades between 12:23:31 and the resumption of trading would not stand, it said.
The US Securities and Exchange Commission said it wants to meet with Nasdaq following the outage.
"Today's interruption in trading, while resolved before the end of the day, was nonetheless serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants," SEC chairwoman Mary Jo White said.
Shares in the stock exchange's owner Nasdaq OMX Group - which themselves trade on the Nasdaq - fell over 3% by the end of the day.
This is not the first technical glitch to affect recent US share trading.
Last year, trading was delayed in the much-anticipated debut of social network Facebook.
Nasdaq agreed to pay a $10m penalty to settle federal civil charges after regulators said its systems and decisions disrupted the float, and it paid out a further $62m in reimbursements to investment firms that lost money because of the problems.
Its rival, the New York Stock Exchange, had similar problems last year when a software glitch at market-maker Knight Capital caused huge price swings in trading in 140 stocks. During Thursday's suspension, Nasdaq advised firms to route their trades elsewhere.