Unified Nasdaq Platform Hits Snags

NEW YORK—The Nasdaq Stock Market last week experienced several technical glitches as it moved to roll out its new single book platform.

In August, Nasdaq started testing a single book for all securities traded on Nasdaq and the former Inet and Brut ECNs, following approval from the U.S. Securities and Exchange Commission (SEC) on July 14 (Inside Market Data, Aug. 7). That effort was rolled out on Oct. 30 for Nasdaq-traded stocks.

Nasdaq has "experienced intermittent technical issues since that rollout," says a Nasdaq spokesperson. "Most of those issues were related to the integration of Nasdaq's legacy data feeds, which are now consuming Inet data that is faster and larger than [the feeds] are used to."

Subsequently, Nasdaq found that message blocking, which is used to build efficiencies in transferring data, was not set correctly, according to another exchange spokesperson. Latency issues occurred on Nov. 1 between 9 a.m. and 12 p.m. for about 7 to 10 seconds, but were later fixed, Nasdaq says.

Nasdaq officials acknowledge that the glitches prompted some firms to move to other platforms, but they view it as a temporary issue and expect firms to return to Nasdaq since the problem has been rectified.

Nasdaq recently announced that as of Nov. 20, it would continue systems integration by migrating non-Nasdaq-listed securities currently on Brut to Inet. Nasdaq says it is moving them in advance of SEC approval due to customer requests. Brut FIX connections will be still be available as access points to the Inet book for posting, order execution and routing.

Meanwhile, Nasdaq officials say that they will delay the launch of the Crossing Network, originally planned for a Nov. 6 debut, "in order to provide more time for systems preparation," but could not elaborate further. The product, which has received SEC approval, will offer intraday and post-close crosses for all Nasdaq, New York Stock Exchange (NYSE) and American Stock Exchange listed securities. When implemented, the exchange says the Crossing Network will be fully anonymous, deeply liquid, free for the first six months after the launch and available for larger trades without market impact.

David Cummings, CEO of Bats Trading, says he "can empathize with Nasdaq's frustration over the technical glitches. We all spend much time and money building various redundancies into our systems, but there always seems to be one common component that unexpectedly fails and causes a temporary outage." Cummings maintains that "Bats subscribers quickly redirected their order flow until the problems were resolved."