Nasdaq Order Routing Systems Fail Near End of Trading Daygreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Wednesday November 29 4:31 PM ET
Nasdaq Order Routing Systems Fail
NEW YORK (Reuters) - Nasdaq said on Wednesday its SelectNet and Small Order Execution Service order routing systems failed near the end of the trading day, leaving the No. 2 stock market unable to update the quotes on all of its stocks.
Further information about the exact time of the failure was not immediately available, Nasdaq spokesman Wayne Lee said.
Nasdaq technicians were trouble-shooting the problem, he said.
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Software glitch forces 11-minute shutdown of NasdaqA SOFTWARE GLITCH in the Nasdaq's price quote engine caused the stock exchange to halt trading for 11 minutes on Wednesday.
It is the third time this year that the stock exchange has experienced a slowdown or halt in trading due to problems with its order-routing system. Analysts said temporary outages and technology glitches are recurrent problems that online brokerages and trade exchanges haven't yet been able to lick.
"Nasdaq will have glitches, as will NYSE and other full-service and online brokerages, because no one is operating in a fail-safe mode," said Dan Burke, an analyst at Gomez Advisors in Lincoln, Mass. "They are all spending tremendous amounts of resources to ensure 100 percent uptime, but there's no real way to ensure it yet."
According to Nasdaq Stock Market officials, Wednesday's halt was caused by a software problem in its Small Order Executive System and its quote update system by Carlsbad, Calif.-based SelectNet. Nasdaq officials said they noticed the problem at 3:40 p.m. EST and suspended trading at 3:49 p.m. EST. Technicians had restored the system incrementally by 4 p.m. EST.
"We shut down on our own, so that folks were not trading on stale quotes," said Nasdaq spokesman Andy MacMillan. "It was a unique combination of circumstances that caused the problem, but the problem was fixed by after-hours trading."
Until the problem was fixed, Nasdaq traders were unable to update and view new quotes. The exchange also handled a higher-than-usual trade volume of approximately 2 billion trades. Nasdaq's average share volume is 1.65 billion trades per day.
Problems with the order-routing system have caused delays on two other occasions this year.
The SelectNet system experienced 75 minutes of update delays on April 4. That day investors traded 2.9 billion shares on the exchange and requested 6.5 million quote updates. On Feb. 18, a communication line malfunction disrupted the dissemination of last-sale-price data on Nasdaq for two hours.
"Technology is brittle," said Jaime Punishill, an analyst at Forrester Research in Cambridge, Mass. "Considering it was down for less than 20 minutes and it has only happened twice this year, I say the Nasdaq has done a pretty good job of keeping its technology up to snuff."
Officials said the overall uptime for the order-routing system is 99.96 percent for the year thus far.
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