Another Glitch Hits Wall Street

The NYSE freezes floor trading for more than three hours.

Floor trading was abruptly halted at the New York Stock Exchange Wednesday. At 11:32 am EST, a sudden problem forced the NYSE to interrupt trading in all symbols and cancel all open orders in its main market. Trading continued, meanwhile, on the NYSE Arca Options and NYSE AMEX/Arca Options platforms, and the NASDAQ continued trading of NYSE-listed shares.1,2

The stoppage continued until the final hour of the trading day: floor trading resumed shortly after 3:00pm EST with closing auctions proceeding as normal.3

Was it a cyberattack? A U.S. government official told the Washington Post that there was “no indication” of terrorism, and the NYSE also said no, attributing the halt in trading to an “internal technical issue.”1,2

Still, Wednesday morning saw some other strange happenings – the Wall Street Journal’s website went down for a spell at approximately the same moment, and hours earlier, United Airlines had to ground all flights temporarily because of what it deemed “a network connectivity issue.”1,2

Tuesday night, the notorious hacker group Anonymous posted a tweet that read “Wonder if tomorrow is going to be bad for Wall Street…we can only hope.”2

Reuters reported that the FBI, the Treasury Department and White House were all monitoring the shutdown Wednesday, with the FBI simply stating that “no further law enforcement action is need at this time.” Securities & Exchange Commission Chair Mary Jo White told Reuters that it was “in contact” with the NYSE and keeping tabs on the problem.2,4

The trading freeze had little immediate impact on retail investors. As UBS director of floor operations Art Cashin cautioned CNBC, “This will not cause a move in any particular direction, so I would kind of wait it out and see what happens.” The day was certainly frustrating for institutional investors, triggering memories of the 2013 NASDAQ “flash freeze” and the exasperating Facebook IPO of 2012.2

One of the leading reasons why floor trading took so long to resume might surprise you. When the NYSE froze trading Wednesday morning, all open orders had to be called off manually – an archaic repair given that NYSE floor trading amounts to about a quarter of the exchange’s composite volume.5

“Is the NYSE technologically the most (robust) exchange in the world? No,” Themis Trading principal Sal Arnuk explained to CNBC. “The fact of the matter is the different exchange operators have diverse standards, different architecture. Some of them are more legacy than others.”4

As the afternoon progressed, the NYSE tried furiously to enable floor trading before the close, as volume notably escalates at the end of a trading day. They succeeded, restoring some sense of “business as usual” while Wall Street again pondered its necessary and fragile relationship with technology.

Citations.

1 – washingtonpost.com/business/economy/nyse-trading-has-been-halted/2015/07/08/46b51974-2588-11e5-b72c-2b7d516e1e0e_story.html [7/8/15]
2 – tinyurl.com/otqw7gr [7/8/15]
3 – bostonglobe.com/business/2015/07/08/nyse/7KVPWRUlqcIcIFJREPsgIJ/story.html [7/8/15]
4 – reuters.com/article/2015/07/08/us-markets-stocks-idUSKCN0PI19Y20150708 [7/8/15]
5 – tinyurl.com/nonlszo [7/8/15]

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