Nasdaq says software bug caused trading outage

Thu Aug 29, 2013 4:02pm EDT
 
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By John McCrank

NEW YORK (Reuters) - Nasdaq OMX Group's (NDAQ.O: Quote) massive trading halt last week was due to a software bug and other internal technology issues triggered by problems at NYSE Euronext's NYX.N Arca exchange that led a key backup system to fail, the exchange operator said on Thursday.

Nasdaq said it was "deeply disappointed" by the three-hour outage on August 22, and while it pointed to connection problems between rival NYSE's electronic exchange Arca and the Nasdaq-run system that receives all traffic on quotes and orders for Nasdaq stocks, it took ultimate responsibility for the glitch.

"Our backup system did not work," Bob Greifeld, Nasdaq's chief executive, said in an interview.

"There was a bug in the system, it didn't fail over properly, and we need to work hard to make sure it doesn't happen again," he said, referring to the inability of the system to fully revert to backup mode.

New York Stock Exchange parent NYSE declined to comment.

Nasdaq said it was in the process of identifying potential design changes to make the Securities Information Processor, or SIP, more resilient, "including architectural improvements, information security, disaster recovery plans and capacity parameters."

The exchange plans to present its initial recommendations for change to the SIP governing committee, made up of U.S. exchanges and the Financial Industry Regulatory Authority, within 30 days.

Nasdaq said that on the morning of August 22, Arca connected and disconnected to the SIP more than 20 times, eating up capacity. It said the SIP's capacity was further eroded as Arca sent a stream of inaccurate stock symbols to the SIP, generating numerous rejection messages.   Continued...

 
A man walks past the Nasdaq MarketSite in New York's Times Square, August 23, 2013. REUTERS/Andrew Kelly