NYSE resumes trading after nearly 4 hour halt

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NYSE halts all trading due to technical issue
Robert Deutsch, USA TODAY

A trader sits at his desk on the floor of the New York Stock Exchange after trading was halted due to a technical glitch in New York on July 8, 2015.(Photo: Justin Lane, EPA)

All trading on the New York Stock Exchange resumed Wednesday shortly after noon after being halted for nearly four hours for unknown internal technical reasons.

Internal technical issues are being blamed for the NYSE shutting down trading at 11:32 a.m. ET. The shutdown also halted trading on the NYSE MKT exchange, a market for small companies. The glitch heaps yet another worry onto investors already rattled by global economic concerns

Such outages are extremely rare in U.S. markets – but the halt brings up memories of the August 2013 “Flash Freeze” when trading on the Nasdaq was shut down for hours. The NYSE is saying the problem is due to a problem with NYSE systems – not any sort of external attack. It’s the fourth trading suspension at the NYSE caused by technical problems in the last 15 years.

USA TODAYDow off 200 as NYSE reopens after 3½-hour shutdownTraders on the NYSE floor were standing around looking at blank trading terminals where no bids or offers were being exchanged. The shutdown by the NYSE didn’t completely halt stock trading, though. Trading in NYSE-listed stocks was still occurring on 11 other exchanges, including the Nasdaq.In a statement during the halt, the NYSE says: “We’re currently experiencing a technical issue that we’re working to resolve as quickly as possible. We will be providing further updates as soon as we can, and are doing our utmost to produce a swift resolution, communicate thoroughly and transparently, and ensure a timely and orderly market re-open.”The outage at the NYSE comes curiously the same day when a technical glitch halted United Airlines flights around the country for roughly two hours. The Wall Street Journal’s Web site also stopped working after the NYSE halted trading.The U.S. Department of Homeland Security did not have an official statement about the computer outages. However, the agency said there was no immediate indication of a coordinated cyberattack. Securities and Exchange Commission Chair Mary Jo White, says in a statement, “We are in contact with NYSE and are closely monitoring the situation and trading in NYSE-listed stocks. While NYSE is working to resolve the situation, NYSE and NYSE MKT stocks continue to trade normally through other trading venues.”It’s important to note trading in stocks listed on the New York Stock Exchange can continue even when the NYSE is down. Many stocks trade on both the NYSE and the Nasdaq not to mention other dedicated electronic networks. These other venues allow traders to buy and sell NYSE listed stocks – even as the NYSE itself is down. Only about 20% of trading in NYSE listed stocks actually occurs on the New York Stock Exchange, as traders have moved much of their volume to other exchanges.USA TODAYFirst Take: Computers show their flaws at United, NYSEAt this point, the Dow Jones industrial average is down 225 points to 17,548. The NYSE outage comes as investors were already fretting over the debt crisis in Greece and a meltdown in Chinese stocks.The S&P Volatility Index, a measure of investors’ fear, had jumped 14% following the halt.“There are 11 other stock exchanges,” says Sal Arnuk, trader at Themis Trading. “The good news is there’s redundancy in the system and stocks are continuing to trade.” Arnuk says the other exchanges are handling the trading “fluidly and smooth.”Despite the outage on the floor of the New York Stock Exchange, traders are still able to place trades of NYSE listed stocks at other stock exchanges, such as the Nasdaq stock exchange, says Joe Saluzzi of Themis Trading and author of the book, Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio.“Trading is going on,” says Saluzzi, adding that the other U.S. exchanges are up and running. “Traders can migrate around and trade on NYSE ARCA, Nasdaq, BATS and so-called dark pools.”USA TODAYA look at NYSE’s past halts and technical glitchesMuch of the trading that normally would have gone through the NYSE was routed primarily to the Nasdaq, according to a data analysis by market watcher Eric Hunsader at Nanex.“It is a big deal, but more of a confidence thing, as you want to know the NYSE is there for trading, says Saluzzi, adding that these types of occasional outages due to technical glitches — if that’s all this turns out to be – has to be expected.“It tells you that anytime you design a high-speed, tech-driven market there can always be tech outages,” Saluzzi says.In an increasingly electronic, automated market, market glitches – despite the uncertainty it creates — are just part of the new investing landscaping, says Savena Mostowfi, head of U.S. equities research at TABB Group, a firm that specializes in market structure.“System glitches are the new norm,” she told USA TODAY.Mostowfi lauded the NYSE’s decision to shut trading down when they realized they had a technical problem.“It was a smart decision rather than create mass confusion,” she says, noting that investors would rather not be in limbo, wondering what the status of their trades are.And while the U.S. exchange system has gotten increasingly fragmented with 11 different exchanges, which is often a criticism, today the ability of investors to seamlessly move their trading to other exchanges is a sign the system “works,” says Mostowfi. The fact that the stock market did not go into freefall despite the outage at the NYSE was “reflective of how seamless the transition was for brokers to go from one trading venue to another.”Investors were pleased to see how other exchanges were able to handle the trades that normally would have been routed to the NYSE. The chart below from Nanex shows how orders to the NYSE (in blue) evaporated during the day.NEED TO TRADE NOW?Here’s how

WINNERS:Cyberstocks rally after NYSE trading halt

When the outage first occurred, traders feared that a computer hacker or cyber attack was the cause of the tech glitch at the NYSE. These fears have been ruled out by the NYSE, easing worries a bit.

A tech glitch, of course, is feared most by Wall Street, says Gary Kaltbaum, president of N.Y. money management firm Kaltbaum Capital Management. (About one hour after the 11:32 outage, the NYSE reiterated that it is an internal technical glitch and not a cyber attack.)

“Let’s hope it’s not a hack,” says Kaltbaum. “Then the worry is, if they (hackers) can do this to the NYSE, what about our banking system or our electric grid. Our stock exchanges are one of the most protected systems out there, and if (hackers) can shut it down, then we have something to really worry about.”

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July 8 — Equity trading was halted at the New York Stock Exchange as the biggest American share venue addressed a computer malfunction and canceled open orders. Bloomberg’s Sam Mamudi on “Bloomberg Markets.”
Bloomberg

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NYSE resumes trading after nearly 4 hour halt – USA TODAY

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