A glitch at the NYSE forced suspension of trading in 216 stocks yesterday due to a technical problem, raising further concern of increasing reliance on vulnerable sophisticated technology after a series of errors related to high-frequency trading (HFT).
Stocks including Lazard, United States Steel Corp and others were suspended from trading on the NYSE through most of the day. The exchange said in a statement that any open orders should be considered cancelled.
According to the NYSE, issues arose with the server that prompted the trading suspensions just as the stock symbols in question were being transferred to a new system, although the suspension was still under investigation.
The first alert to traders from the NYSE concerning potential problems with the stocks came shortly after 9.30 am local time, followed by a series of follow-up messages until trading was suspended for the day before noon. Closing prices were set using back-up methodology.
‘The problem seemed to be a software programming issue related to the individual server for these 216 symbols,’ Richard Adamonis, a spokesperson for NYSE Euronext, said in an interview with Bloomberg News after the glitches appeared.
The glitches, coming less than two weeks after a two-day trading suspension across US markets caused by superstorm Sandy hitting the northeastern US, also follows a series of technical glitches, errors and miscalculations that have rattled confidence in the technology surrounding equities markets.
HFT, which relies on increasingly complex technology, has come under scrutiny worldwide in the last couple of years since the so-called flash crash of 2010, which prompted a 9 percent drop in the Dow Jones Industrial Average.
The issue, though apparently unrelated to yesterday’s stock suspension, resurfaced in August when Knight Capital made a series of erroneous trades using HFT technology that cost it $460 mn and forced the company to seek a bailout.
In another high-profile glitch, NASDAQ trading in Kraft Foods shares was suspended after the stock soared almost 30 percent minutes after trading started on October 4. NASDAQ attributed the stock’s rapid ascent to the error of a single unidentified broker and canceled $1.5 mn in trades of Kraft shares.
