TRADING in more than 3,000 US firms was suspended for over three hours yesterday, as a mysterious technical issue brought the Nasdaq stock exchange to a halt.
The unprecedented suspension just after midday left investors unable to trade popular tech shares such as Apple, Google, Facebook and Microsoft. Nasdaq blamed a problem with distributing share price quotes for the shutdown, but the cause of this remained unclear with officials from Nasdaq citing an unexplained technical issue.
Because the problems involved the data feed from which prices are derived, investors were unable to direct their trades to other exchanges.
The exchange announced and then pushed back the reopening of the market, which finally started again at 3:25pm eastern time.
There was little reaction in the index itself, but shares in Nasdaq’s parent company, which were up before the outage, closed down 3.4 per cent.
John Edge of NICE Actimize, which specialises in software for risk issues in finance, blamed the high level of automation involved in modern trading for the shutdown. “This is much worse than a broker-dealer being knocked out – it’s the whole market – it’s the US economy. This highlights the potential of very dangerous scenarios,” he added.
Sal Arnuk, co-head of equity trading at Themis Trading, said it would lose money from the outage: “Any brokerage firm gets paid by executing orders. So yes, we are frustrated, and this hurts us, it hurts the market and it hurts public confidence.”
Last night’s outage was just the latest in a series of computer problems to hit investors. Earlier this week, Goldman Sachs accidentally sent out orders as part of another technological mishap. Two weeks ago stock exchange operator BATS Global Markets was closed for almost an hour. The Nasdaq also struggled to manage Facebook’s market launch last year, with the delayed start and technical errors ultimately costing the exchange $10m (£6.4m) in fines.
The Nasdaq also shut down for an hour in 1994 when a squirrel disrupted the exchange’s power supply.