Breakdown halts trade of Nasdaq shares

Trading in Nasdaq-listed stocks including Apple, Google and Microsoft ground to a halt just after midday in New York yesterday as the second largest US stock exchange by volume suffered a technical breakdown, sparking chaos and confusion among traders and market participants.

Nasdaq stock trading had not resumed after more than two hours as US exchanges scrambled to try to identify the source of the problem that affected the distribution of prices in an exchange that is home to 2,700 companies worth about $6 trillion.

Investors said they could not recall a similar wholesale suspension of a US stock exchange and the halt had weighed heavily on trading activity on other US exchanges in the afternoon.

It is the latest embarrassment for US exchanges and came just a year after a technical mishap on Nasdaq led to a botched start to trading in shares of Facebook's IPO.

Trading glitch
The breakdown sparked concerns about the plumbing that underpins the US market. Just days ago Goldman Sachs suffered a high-profile trading glitch involving its computerised trading systems.

US markets have been criticised for their high degree of fragmentation, where trading groups swap shares at millisecond speeds across 13 equity exchanges and almost 50 alternative trading platforms.

"These types of things happen but it seems they happen a lot more than they used to," said Paul Hickey, co-founder of Bespoke Investment Group.

“You’d think with technology you’d have less of this occurring. It’s positive that the market was actually up, [I]can’t imagine what would have happened if this was yesterday [Wednesday] when the Fed minutes came out.”

Nasdaq issued the trading halt at 12.14pm on what was otherwise a quiet trading day in August marked by seasonally low volumes. A spokesman declined to comment on when trading would resume. The Nasdaq index was up 0.87 per cent to 3,631.17 when the system went down.

John Nester, a spokesman for the Securities and Exchange Commission, said: "We are monitoring the situation and are in close contact with the exchanges."

A managing director at a Wall Street trading group said: "Right now we're just waiting and seeing. Overall trading volumes are way down."

Share prices
Nasdaq said it would reopen trading in stocks listed on its exchange at a time to be determined. It said it would take bids and offers for five minutes to determine the supply and demand for share prices before trading would official resume. – The Financial Times Limited 2013