NYSE shutdown: A brief, recent history of stock markets halting trade

New Delhi: On Wednesday morning, the New York Stock Exchange (NYSE) halted trade at 11:32 am Eastern Time (ET) for what it said was a “technical internal issue” and “not a result of a cyber breach” as was being speculated at the time. Trading resumed at 3:10 pm ET, after a gap of three and a half hours. The outage, however, wasn’t the first instance of a technical glitch stopping trade at the NYSE in its 198-year history.

The most recent glitch was in 2009, when the NYSE shut down 15 minutes early to “execute customer orders impacted by system regularities”. Prior to that, on 1 June, 2005, trading was halted at 3:56 pm, four minutes before the regular closing time, due to what the NYSE called a “systems communications problem”.

Trading, the NYSE data said, “did not resume and all Crossing Sessions were cancelled.” The market reopened for trade the following day at 9:30 am. On 8 June, 2001, trading was “halted from 10:10 am to 11:35 am (one hour, twenty-five minutes), due to a computer systems connectivity problem”.

The Washington Post quoted Ted Weisberg, who has traded on the exchange floor for nearly five decades as saying, “It’s not the first time, and it won’t be the last time. You rely on computers, and computers break.”

In the 1990s, the NYSE saw four such glitches due to reasons ranging from an explosion of a Con Edison transformer to system troubles. In October 1998, trading was halted for 59 minutes from 1:16pm to 2:15pm for what the NYSE called “a computer switch malfunction”.

Likewise, in December 1995, a “computer systems trouble” delayed opening for nearly an hour until 10:30am. Four years earlier in 1991, trading was halted on 22 October for 24 minutes (from 10:21am to 10:45am) due to a “power dip”.

In 1990, the NYSE suffered two such outages—first in November when an electrical fire delayed opening for an hour and then a month later when an explosion of a Con Edison transformer outside 55 Water Street delayed opening to 11 am.

The NYSE isn’t the only stock exchange to be affected by these unprecedented outages. There’s Nasdaq, whose track-record includes squirrels chewing up electrical lines. Not once, but twice.

The first such incident happened in 1987, when a stray squirrel interrupted trading for 82 minutes at Nasdaq and shut its systems down. The New York Times reported, “An adventurous squirrel touched off a power failure in Trumbull, Conn., that shut down the National Association of Securities Dealers’ Automatic Quotation service for 82 minutes yesterday.” Trading resumed at 10:43 am, after the squirrel died. Seven years later, in 1994, Nasdaq’s squirrel troubles came to the fore again, when trading halted for 34 minutes “after a squirrel chewed through an electric company’s power line and the stock exchange’s own backup power system in Trumbull, Conn. failed to kick in,” The New York Times reported.

More recently, in May 2012, Nasdaq came under severe criticism, including from the Securities Exchange Commission (SEC), for its mishandling of Facebook’s initial public offering (IPO).

According to a USA Today report, the IPO “opened with delays and caused errors with trading and quote systems.” The SEC also levied a $10 million dollar fine on Nasdaq for “poor systems and decision making” after the Facebook IPO. It’s latest outage, however, wasn’t quite squirrel-related. In August 2013, a software bug in Nasdaq’s systems caused a shut down for over three hours.

Back home, the Bombay Stock Exchange (BSE) has also seen technical glitches several times. Last year, there were multiple instances of trading being halted due to technical glitches. In April 2014, share prices stopped updating for 15-20 minutes. At the time, it was being speculated that this glitch was due to BSE’s switch to a new, faster trading platform called the “BOLT Plus”. Two months later, in July 2014, a hardware problem at BSE stopped trading for nearly three hours.