The Tech Stock Exchange Taken Out By Faulty Tech
On August 22, trading was halted on the Nasdaq OMX’s (NASDAQ:NDAQ) exchange in what is known in the industry as a “flash freeze.” The incident, which negligibly affected stock prices, served as a reminder to regulators and exchange operators of just how fragile the modern markets are given their dependence on intricate software systems. It was a problem with its software — the technology on which trading relies — that forced the Nasdaq exchange to go offline temporarily, a slightly ironic problem for an exchange home to many of the worlds biggest technology companies.
Nasdaq OMX “determined to halt trading on August 22 after the SIP [Securities Information Processor] could not process quotes thereby impacting the fair and orderly functioning of the public market,” read a Thursday press release explaining the trading halt.
The exchange operator’s review determined that “high frequency trading played no role in the technology events,” rather “the catalyst for the SIP failure was a confluence of unprecedented events that overwhelmed the processing capacity” of the Nasdaq system that reports prices of recent trades.