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--Nasdaq-listed securities appeared frozen in time for several minutes to many traders Thursday afternoon
--Not immediately clear whether issue stemmed from Nasdaq's own systems or another exchange
--Trade data on Apple, Google stocks affected
By Matt Jarzemsky and Jacob Bunge
The Nasdaq Composite Index and all securities listed on the exchange appeared to much of the investing world to be briefly frozen in time Thursday afternoon, due to an interruption of a widely used market-data system.
Nasdaq-listed securities continued trading throughout the episode on some, though not all, U.S. exchanges, and many professional traders were able to see the action using specialized market-data services. But the issue caused moments of confusion on Wall Street.
Nasdaq OMX Group Inc. (NDAQ), which owns the Nasdaq Stock Market, notified traders at 1:42 p.m. EST that its staff were looking into "an issue with stale data." A second notice, sent at 1:53 EST, said the issue had been resolved. A spokesman for Nasdaq OMX confirmed the problem had been fixed but declined to comment further. It wasn't immediately clear whether the issue stemmed from problems with Nasdaq's own systems or another exchange.
Direct Edge Holdings LLC, which runs two electronic stock exchanges, halted trading in all Nasdaq-listed stocks for about 10 minutes starting at 1:44 p.m. EST, according to a notice sent to traders.
Meanwhile, services used by many individual investors left them in the dark. The chart of the Nasdaq Composite Index on Nasdaq's free website, for instance, showed a flat, parallel line--reflecting no trading, or a level holding steady--during the window in question rather than the jagged up-and-down ticks investors are used to seeing. The index held at 3116.94 for more than 15 minutes, according to data on Nasdaq's website.
"When an exchange goes down or goes static on a particular feed, it can become a stressful situation on a desk, because you don't always know where you stand," said Chris Hempstead, director of exchange-traded-fund trading at WallachBeth Capital LLC, a New York brokerage. Mr. Hempstead said his firm was able to continue trading, using tools available to many professional traders.
The issue stemmed from a key feature of the U.S. stock market that is unknown to most mom-and-pop investors. Nasdaq operates a computer processor that disseminates information on offers to buy and sell Nasdaq-listed securities among exchanges and other trading venues.
The process is meant to ensure market participants are trading on the venue that offers the best price. U.S. equity trading is split among 13 stock exchanges and dozens of off-exchange venues.
Separately, New York Stock Exchange parent NYSE Euronext (NYX) operates similar systems sending information about securities listed on its exchanges.
During the issue Thursday, data from FactSet, which distributes information on stock pricing, showed no trades in Nasdaq-listed stocks such as News Corp. (NWSA), Apple Inc. (AAPL) and Google Inc. (GOOG) for about a 15-minute period ahead of 2 p.m. News Corp. owns Dow Jones & Co., publisher of this newswire.
One hundred shares of Apple stock traded at 1:36:37 p.m. EST at $547.64 a share, according to FactSet. The iPhone maker's stock would normally see trades that can number in the dozens in just one minute. But another Apple trade wasn't reflected in FactSet's data for nearly 15 minutes, until 1:51:14, when 150 shares changed hands at $547.70 a share.
Similar gaps were seen in the trading of other Nasdaq-listed shares, including those of Cisco Systems Inc. (CSCO) and Amazon.com Inc. (AMZN).
"I've heard of data issues, but this is the first time I've seen anything like this," said Frank Ingarra, head trader at NorthCoast Asset Management. "It's like a large hole in the middle of the day."
-Write to Matt Jarzemsky at [email protected]
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