Technical problems forced the New York Stock Exchange to halt
trading on Wednesday, jarring investors and traders already
unnerved by recent volatility across global financial markets.
"We're currently experiencing a technical issue that we're
working to resolve as quickly as possible," a representative of the
exchange said in an email. "We are doing our utmost to [...] ensure
a timely and orderly market reopen."
NYSE was quick to dismiss speculation that the trading
disruption was caused by hacking. On Twitter, the exchange said the
problem "is not the result of a cyber breach."
The shutdown was isolated to specific trading venues, and
investors could still buy and sell NYSE-listed stocks on other
venues, such as NYSE's own Arca exchange. NYSE is owned by
Intercontinental Exchange Inc.
NYSE officials told Wall Street executives that the firm had no
timetable for when trading would resume, according to a person
briefed on a call the exchange held with industry executives late
Wednesday morning.
The exchange officials told the executives that the technical
glitch that disrupted trading began when NYSE attempted to fix
issues affecting a smaller number of stocks, the person said. The
efforts to fix that problem led to the broader trading halt.
Speaking on a late morning conference call arranged by the
Securities Industry and Financial Markets Association, a trade
group, NYSE officials said they would take their time to resolve
the issue, said the person. The call drew about 80 market
participants, including bank executives and big investors.
The suspension came in the middle of a broad selloff in U.S.
stocks that was spurred by a deepening rout in China's stock
markets. It comes on a day when the Federal Reserve is slated to
disclose minutes from its last meeting, a release that in the past
has prompted swings in stocks.
The glitch is also the latest incident illustrating the
fragility of trading systems that allow capital markets to
function.
While many traders were able to route stock orders to other
exchanges, they're waiting to see if NYSE is able to restart
trading before the market is scheduled to close at 4 p.m. New York
time.
If technical problems prevent the NYSE from holding its closing
auctions for NYSE-listed stocks, it could hurt big investors
because they tend to do most of their trading during the opening
and closing of the markets. Prices of mutual-fund shares are set by
closing prices for stocks.
"The real issue is going to be can we get fixed in time for the
closing auction today?" said James Angel, a professor who studies
the structure of the stock market at Georgetown University.
NYSE told floor traders that the problem originated in a
software update it installed last night, according to Peter Costa,
a floor trader and president of Empire Executions.
"They told us they did some software updates overnight and
tested it without problems, but this morning something happened,"
Mr. Costa said.
NYSE executives told them that they expected trading to be
restored "soon," he said. A NYSE spokeswoman was not immediately
available to comment on the source of the glitch.
Before the full trading suspension, NYSE officials told brokers
they were investigating a "reported issue with a gateway
connection" affecting trading in some 200 stock symbols, according
to emails reviewed by the Journal, including the shares of Dr
Pepper Snapple Group Inc., Federated Investors Inc. and Time Warner
Cable Inc.
The "gateway" is a network of computers that institutions and
traders use to connect to the system that matches buyers and
sellers.
When the NYSE temporarily suspended trading in all stocks on
Wednesday morning, trading at Seaport Securities Corp., with
operations on the NYSE floor, didn't stop. Instead, orders were
redirected to the firm's operations at 60 Broad Street, just down
the street from the exchange.
"It's an inconvenience, it's annoying, but it has not
interrupted our business," said Ted Weisberg of Seaport Securities.
"It could be nothing more than a simple glitch," he said, but added
that people "tend to think the worst" when something comes off the
rails.
"We are in contact with NYSE and are closely monitoring the
situation and trading in NYSE-listed stocks," Mary Jo White,
chairwoman of the Securities and Exchange Commission, said in a
statement. "While NYSE is working to resolve the situation, NYSE
and NYSE MKT stocks continue to trade normally through other
trading venues."
U.S. stock market malfunctions have plagued exchanges over the
past several years. The biggest outage hit Nasdaq in August of
2013, when a technical problem prevented it from accurately
condensing and broadcasting the best bids and offers for
Nasdaq-listed stocks. Their system, one of three Securities
Information Processors for the stock market, went down for three
hours on August 22. Nasdaq halted all trading of Nasdaq-listed
stocks during the period, which caused a major disruption for
investors.
On Wednesday, Nasdaq said its systems were operating normally
and were trading all securities, including those listed on the
NYSE.
BATS Global Markets Inc., another major exchange operator, had
an issue with one of its markets on Monday. Trading was halted on
its EDGX exchange for 30 minutes.
In 2012, a technical error by Knight Capital Group led it to
send a stream of incorrect orders into the market. The mistake cost
it more than $450 million and laid the groundwork for the firm to
be acquired by Getco LLC, a high-frequency trading firm, several
months later.
BATS was forced to cancel its own initial public offering in
March 2012 because of a technical issue on its exchange.
Justin Baer contributed to this article.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com and
Bradley Hope at bradley.hope@wsj.com
Access Investor Kit for Dr. Pepper Snapple Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US26138E1091
Access Investor Kit for Federated Investors, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US3142111034
Access Investor Kit for The NASDAQ OMX Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6311031081
Access Investor Kit for Time Warner Cable, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US88732J2078
Subscribe to WSJ: http://online.wsj.com?mod=djnwires