NYSE says software problem led to trading outage

The New York Stock Exchange said a botched technology upgrade, not a hacking attack as some feared, caused Wednesday’s outage that froze one of the world’s biggest equity markets.

The market was already lower as traders anxious about China’s failure to halt a plunge in its shares and talks remained stuck between Greece and its lenders.

According to a NYSE market status history website, connectivity issues – reported earlier in the day and seemingly resolved prior to 9:30 a.m. EST – may have impacted certain orders.

“As customers began connecting after 7am on Wednesday, there were communication issues between customer gateways and the trading unit with the new release”.

The outage came at a time when traders had plenty of other things to worry about.

Trading on the New York Stock Exchange was suspended, all of United Airlines’ flights were stopped and the Wall Street Journal was unable to publish any stories online. However, NYSE and regulators say the outage was caused by a botched software update, not hackers. So perhaps it’s understandable that people are a little skeptical that mere incompetence could possibly have been behind yesterday’s slightly late New York Stock Exchange opening and other issues, previous experience notwithstanding.

While the NYSE outage Wednesday dented confidence, investors are a lot more focused on China. Some conspiracy theorists think they succeeded Wednesday and Wall Street just won’t admit it. But KTRH’s moneyman says even if they can hack the stock exchange, it hardly matters. It is now owned by Intercontinental Exchange, an Atlanta-based company.

One trader, Peter Costa, told the New York Times that NYSE employees had to manually cancel around 700,000 orders that were in the system when it crashed. Japan’s Nikkei 225 rose 0.6 percent to 19,855.50 and South Korea’s Kospi added 0.6 percent to 2,027.33.

“Nasdaq systems are operating normally and are trading all symbols including Tape A (NYSE) securities”, it said via Twitter before NYSE trade resumed. Later, the Securities and Exchange Commission slapped a fine of about $10 million on Nasdaq for the hiccup in the IPO. That compares with a drop of 1.1 percent for Standard and Poor’s 500 index. However, this update to the gateways caused more communication issues between the gateways and trading units.

A technical issue has triggered a system-wide halt. That’s when NYSE chose to pull the plug and suspend trading – a shutdown that lasted almost four hours.