Did High Frequency Trading Break the NASDAQ Today?
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Price: $78.56 +1.17%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.2%
EPS Growth %: +11.8%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.2%
EPS Growth %: +11.8%
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NASDAQ (NASDAQ: NDAQ) updated its statement on why trading on the exchange was unprecedentedly halted for 3-hours Thursday, and if what the updated statement implies is true, high frequency trading could be to blame.
"There was a connectivity issue between an exchange participant and the SIP, which led to degradation in the ability of the SIP to disseminate consolidated quotes and trades," NASDAQ said. "The cause of the issue has been identified and addressed."
Because quotes were not being disseminated by the SIP, or Securities Industry Processor, the NASDAQ was forced to issue a regulatory halt for all trading in NASDAQ-listed securities. After being halted at 12:14PM ET, trading did not resume until 3:25PM ET for most issues.
The term "exchange participant" is what has not been described by NASDAQ.
SEC Chair Mary Jo White issued a statement on the matter, but also stepped around the high frequency trading issue. "The continuous and orderly functioning of the securities markets is critically important to the health of our financial system and the confidence of investors," she said. "Today's interruption in trading, while resolved before the end of the day, was nonetheless serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants. The Commission is determined to enhance the safeguards necessary for strong market systems. As one step, I will work to advance rules that the Commission proposed earlier this year regarding new standards for the trading and other systems that are central to the integrity of our markets. I also will shortly convene a meeting of the leaders of the exchanges and other major market participants to accelerate ongoing efforts to further strengthen our markets."
UPDATE: According to the WSJ, NYSE Arca was "exchange participant."
"There was a connectivity issue between an exchange participant and the SIP, which led to degradation in the ability of the SIP to disseminate consolidated quotes and trades," NASDAQ said. "The cause of the issue has been identified and addressed."
Because quotes were not being disseminated by the SIP, or Securities Industry Processor, the NASDAQ was forced to issue a regulatory halt for all trading in NASDAQ-listed securities. After being halted at 12:14PM ET, trading did not resume until 3:25PM ET for most issues.
The term "exchange participant" is what has not been described by NASDAQ.
SEC Chair Mary Jo White issued a statement on the matter, but also stepped around the high frequency trading issue. "The continuous and orderly functioning of the securities markets is critically important to the health of our financial system and the confidence of investors," she said. "Today's interruption in trading, while resolved before the end of the day, was nonetheless serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants. The Commission is determined to enhance the safeguards necessary for strong market systems. As one step, I will work to advance rules that the Commission proposed earlier this year regarding new standards for the trading and other systems that are central to the integrity of our markets. I also will shortly convene a meeting of the leaders of the exchanges and other major market participants to accelerate ongoing efforts to further strengthen our markets."
UPDATE: According to the WSJ, NYSE Arca was "exchange participant."
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