Trading on the Nasdaq stock exchange ground to a halt for more than three hours this afternoon due to what’s being called a “technical glitch.” The tech failure caused the world's largest electronic exchange to suspend trading just after noon. Trading resumed several hours later, but the cause of the malfunction is still unknown.
According to the New York Times DealBook, “the breakdown appears to be one of the most significant technology problems to hit a trading world that has become accustomed to glitches.” In May 2012, the highly publicized Facebook initial public offering on Nasdaq also encountered technical errors and delays. Nasdaq said it upgraded its systems technology after the mishap and paid a $10 million fine.
If an exchange experiences technical difficulties, under normal conditions, DealBook points out, "traders can direct their orders to other public exchanges. But because the problems involved the data feed from which prices are derived, all exchanges stopped trading Nasdaq stocks on Thursday." Yesterday, in a glitch-free trading day, a total of $48 billion was traded on the Nasdaq, according to data from BATS Global Markets.
As for the reason why the Nasdaq went offline, USA Today speculates it could have been hacked: "the incident had all the earmarks of the three waves of denial-of-service attacks that have bedeviled U.S. financial institutions, including stock brokerages, since last September."
Bloomberg, however, reports that Nasdaq had warned of potential risks in its most recent annual report. And DealBook places this market meltdown in context with a handy history of Nasdaq's tech failures, from squirrels to computer bugs.