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Risk Management

12:46 PM
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Breaking: Nasdaq Resumes Trading After 'Flash Freeze'

The market maker resumed trading this afternoon after it suspended trading for several hours due to a technical error.

Nasdaq resumed trading after being down for several hours this afternoon. As of 3:50pm the market maker is conducting trades, officials say.

It remains to be seen how much this halt will cost the market maker and its clients. The SEC says it was closely watching the actions of the market maker. An investigation could be forth-coming.

While no one knows the reason for the trading halt, some industry observers shared their suspicions. One talking head on CNBC said, "This happens when legacy trading systems trade with other legacy trading systems."

Another commentator on CNBC blamed RegNMS and the multiple trading venues and dark pools that exist in the current market.

One trader blamed electronic trading. "This is just another one of those headaches that are going on with this electronic stuff," says Frank Ingarra, head trader at NorthCoast Asset Management. "That's why it is important that you have multiple venues."

The Nasdaq meltdown comes two days after Goldman Sachs suffered a trading glitch that may cost the investment firm $100 million.

[Why is Goldman Sachs suffering from trading glitches?]

Nasdaq is no stranger to technical difficulties. The exchange experienced an embarrassing episode when its system choked during the launch of the much anticipated Facebook IPO in 2010. Nasdaq had to pay a hefty fine for its system failures just this past spring.

Today's Events

Nasdaq OMX has suspended trading starting at 12:20pm this afternoon. The market maker issued this statement, according to the Wall Street Journal:

Due to issues with quote dissemination to the UTP SIP, NASDAQ BX and PSX are halting trading in Tape C securities until further notice.

At around 1 pm, an on-air CNBC commenter said that this appears to be "some sort of technology glitch."

One commenter on Twitter posted, "Let's call this a Flash Freeze."

At first the market maker said it was having problems with Quote Disseminations in its equities and options orders.

Nasdaq has reportedly told investment firms to route orders away from Nasdaq OMX.

12:52pm UPDATE

NYSE is apparently not trading Nasdaq-based stocks.

1:07pm UPDATE

The U.S. Securities and Exchange Commission said it was closely monitoring the on-going Nasdaq trading freeze.

"We are monitoring the situation and are in close contact with the exchanges," SEC spokesman John Nester tells Reuters.

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio

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