In the wake of Nasdaq’s three-hour trading outage Thursday, which is being attributed to a quote dissemination failure, the exchanges and regulators are looking at measures to prevent a recurrence.
Trading in Nasdaq securities was disrupted after Nasdaq OMX says that it 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,” it says.
The exchange reports that the technical issues that caused the problem were resolved within the first 30 minutes of the outage. However, the disruption dragged on for several hours as “Nasdaq OMX, other exchanges, regulators and market participants co-ordinated with each other to ensure an orderly re-opening of trading.”
Nasdaq says that it “will work with other exchanges that are members of the SIP to investigate the issues… and we will support any necessary steps to enhance the platform.”
Mary Jo White, chairwoman of the U.S. Securities and Exchange Commission (SEC) issued a statement after the trading day indicating that although the trading disruption was resolved before the end of the day, it was still “serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants.”
White says that the SEC “is determined to enhance the safeguards necessary for strong market systems.”
In particular, she says that she will push for rules that the commission proposed earlier this year “regarding new standards for the trading and other systems that are central to the integrity of our markets.”
And, she pledged to call a meeting of the leaders of the exchanges and other major market players “to accelerate ongoing efforts to further strengthen our markets.”