New York Exchanges Stumble

On Friday morning, the Nasdaq Stock Market suffered a problem with its securities information processor (SIP) connection, which prevented it from printing to the consolidated quote, according to a Nasdaq spokesperson. The problem began at 9:17 a.m. local time, "but it was resolved by 9:40 a.m.," the spokesperson says.

During that time, the exchange could not print to the consolidated quote, but still could print to its proprietary feeds, such as Nasdaq TotalView, and its index feeds, such as Nasdaq 100, says the spokesperson.

As a result, the Nasdaq market open message was not disseminated over the UTP feed and Nasdaq instructed member firms that they may need to open their markets manually.

For one affected agency brokerage, "the Nasdaq quotes were wrong and trading in Nasdaq instruments was near impossible since there were no reference prices to gauge where the stocks were trading," says a trader at the firm. "It was essentially trading in the dark," the trader adds.

A day earlier, last Thursday afternoon, New York Stock Exchange (NYSE) brokers were left without confirmation notices, following a failure of the exchange's Arca Routing System (ARS).

The affected router went down at about 3 p.m. local time Thursday, according to an alert sent to members by the exchange. By 3:25 p.m., NYSE switched to Intermarket Trading System (ITS) routing.

However, the same alert, sent out by NYSE at 4:24 p.m., states that approximately 1,600 reports were still pending transmission back to firms.

A subsequent alert sent by the exchange at 4:58 p.m. states that 2,941 messages were routed outbound and all pending orders from between 3:10 p.m. and 3:25 p.m. were confirmed "nothing done."

"This is a minor issue that did not cause an interruption in trading," said a NYSE Euronext spokesperson, who declined to comment on the backlog of trades that still needed to be confirmed on Thursday night.

A source familiar with the situation says that only a portion of the ARS went down, but that the decision was made to route all messages using the ITS system.

"NYSE is telling us that it won't definitively know until morning when and where some of our orders were executed," says one agency trader affected by the outage, who spoke to DWT Thursday night.

"The issues were cleared up Thursday night, long before Friday's market open," said the NYSE Euronext spokesperson the following morning.

The ARS outage comes seven weeks after a queuing delay that occurred on March 28 (DWT, April 2). On that day, an alert sent by NYSE at 5 p.m. local time said that the exchange encountered a "queuing issue" with reports at Post 5-12 around 3:31 p.m. and that they were resolved shortly after 4 p.m., which allowed NYSE to close all securities.

The alert went on to say that there was a possibility that duplicate trade reports were issued without a "POS DUP" indicator and instructed traders to compare the time stamps on their reports.

A NYSE spokesperson declined to comment on the incident at the time.

However, a source familiar with the situation downplayed the severity and said the problem was actually a reporting issue with outgoing orders that stemmed from human error and was not system-related.

On Feb. 27, the NYSE's Hybrid Market trading system suffered heavy message traffic, which led to a manual close due to a 70-minute lag in the proper calculation of the Dow Jones Industrial Average (DJIA) that started at 1:50 p.m. local time and was corrected by 3 p.m. The result revealed an approximate 200-point drop in the DJIA, which resulted in heavier than normal trading (DWT, March 5).