The 5 worst exchange outages
July saw the New York Stock Exchange (NYSE) suspend activity on its trading floor for more than three hours. The cause, a software update designed to test new requirements for trade timestamps.
This was just one in a long line of trading venue outages. Here are some of the worst exchange halts in recent years.
On August 22nd, trading in hundreds of stocks including Apple, Microsoft and Google was halted for several hours after a technical breakdown.
Nasdaq’s parent company said it halted trading after the Securities Information Processor (SIP) was not disseminating price quotations.
Nasdaq OMX Group Inc said a "connectivity issue" between an exchange participant and the SIP caused the breakdown, adding that this was created by a “confluence of unprecedented events that overwhelmed the processing capacity of the [SIP]”.
The last big outage on the NYSE came on November 12th 2012, when it suspended trading in more than 200 companies for most of the day.
Early on, NYSE noticed problems with one of its cash equity matching engines and it said it would not publish quotes on a total of 216 stocks. Trading continued on other exchanges but Nasdaq OMX Group Inc, BATS Global Markets and Direct Edge exchanges declared ‘self help’ and stopped sending orders to the NYSE.
"Orders were coming in, but those who were issuing the orders were not getting their confirmations or their reports, so we felt it was best to zero it out, if you will, and then to suspend trading of those stocks on our market," Rich Adamonis, an NYSE spokesman, told Reuters at the time.
Tokyo Stock Exchange, 2012
Derivatives trading was taken offline for an hour and a half after a serious system glitch on the morning of August 7th 2012. The outage affected stock-index and government-bond futures and options, with traders diverted to the Osaka exchange. Japanese regulators were not impressed and ordered the exchange to improve systems.
It was found that a hardware failure occurred at a derivatives trading system network device known as “Layer 3 Switch #1”. This was the primary device in a primary-standby configuration.
London Stock Exchange, 2008
September 9th 2008 was not a good day for the London Stock Exchange (LSE) after it lost virtually an entire day of trading on what should have been one of the busiest of the year. Trading volumes were surging worldwide on news that US regulators would bail out mortgage lenders Fannie Mae and Freddie Mac.
The LSE frantically launched a “root and branch” investigation after traders had problems connecting to TradElect, a proprietary LSE platform developed with Microsoft that was barely a year old. It was the system’s second failure in a year and dealt a severe blow to the LSE.
Facebook’s IPO on May 18th 2012 didn’t go well on the Nasdaq, after the exchange was forced to halt trading in the company’s shares for 20 minutes. Quotes were cancelled and confusion reigned. Nasdaq got a $10 million fine for its troubles and paid brokers $62 million in compensation. It came at a bad time for US exchanges after BATS Global Markets Inc withdrew its IPO after failing to trade on its own platform.