For the first time in years the Nasdaq ceased trading entirely due to a technical glitch, and investors expressed worry that the far-reaching implications could shake investor confidence in the market.
Trading abruptly ceased at 12:14 Eastern Time, as the exchange was having trouble distributing stock quotes. The first signs of the problem appeared 20 minutes prior, when “momentary interruptions” first began appearing.
In January 2013, the Nasdaq experienced a minor glitch for 15 minutes, and trading was halted for 10 minutes.
The last significant shut down of the Nasdaq in recent times was during Facebook Inc.’s (FB) disastrous IPO in May 2012. The company that owns Nasdaq, Nasdaq OMX Group (NDAQ) ended up paying out over $62 million to investors negatively affected by the shutdown.
A glitch of this severity has not happened in quite some time, though. Christopher Nagy, president of consultancy firm KOR Trading and a former head of trading at TD Ameritrade said, "I can't remember this happening in recent memory."
The last time the Nasdaq experienced a total shutdown of this magnitude was probably in December 1987, when a stray squirrel caused a power failure in Trumbull, Conn. that shut down the Nasdaq system for 82 minutes.
The financial implications of the most current glitch are not yet known.
Nasdaq expects trading to resume at 3:10 PM eastern time.
(image courtesy of Wikipedia Commons)
Trading resumed as expected at 3:10 PM EST on Aug. 22. Nasdaq issued the following statement regarding the trading shutdown:
Earlier this afternoon, NASDAQ OMX became aware that price quotes were
not being disseminated by the Securities Industry Processor (SIP),
which consolidates and disseminates all prices for the industry.
Responding to the SIP issue, in order to protect the integrity of the
markets, NASDAQ OMX issued a regulatory halt for all trading in
NASDAQ-listed securities. In the first 30 minutes, technical issues
with the SIP were resolved. For the remaining period of time, NASDAQ
OMX, other exchanges, regulators and market participants coordinated
with each other to ensure an orderly re-opening of trading in
NASDAQ-listed securities. Trading resumed and the balance of the
trading day finished in normal course.
NASDAQ OMX will work with other exchanges that are members of the SIP
to investigate the issues of today, and we will support any necessary
steps to enhance the platform.