NASDAQ blames trading halt on data surge

New York TimesAugust 29, 2013 

The Nasdaq OMX Group on Thursday attributed last week’s three-hour trading halt a surge of data that overwhelmed its server, in the stock market operator’s most detailed accounting yet of the market outage.

In a statement, the company highlighted more than 20 attempts by Arca, one of the exchanges run by NYSE Euronext, to connect and then disconnect to the system that provides prices for recent trades in Nasdaq stocks. Those were accompanied by what Nasdaq described as a stream of quotes for inaccurate symbols from Arca, which Nasdaq’s system was forced to reject.

The two incidents together inundated Nasdaq’s system with more than twice the data that it was designed to handle.

A flaw in Nasdaq’s own server then emerged that essentially led to the failure of the backup system to kick in, forcing to shut down the system. At 12:14 p.m., the exchange sent a notice to traders notifying them of the complete market halt.

While Nasdaq fixed the problem within 30 minutes of halting trading, it took additional time to contact other markets and regulators. Trading resumed about 3:30 p.m.

“They obviously had issues, and it caused an event,” Robert Greifeld, Nasdaq’s chief executive, said in a telephone interview Thursday, referring to the NYSE exchange. “We obviously had issues; we should be able to handle that. We were supposed to be able to fail over, and we did not.”

He added that Nasdaq was not blaming Arca for the outage. But he said Nasdaq was accepting responsibility for its share of problems while also pointing to what he described as broader issues affecting the stock market industry. Those include information security and data capacity, with specific recommendations being made within 30 days.

An NYSE Euronext spokesman declined to comment.

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