Trading resumed on the Nasdaq exchange after a three-hour shutdown that halted trading in such high-profile companies such as Apple, Microsoft and Facebook. A problem affecting quote dissemination starting at 12:14:03 ET froze trading in all securities in the longest shutdown at the exchange in recent memory.
Despite the freeze, Nasdaq said that it would not cancel orders. “Nasdaq will not be canceling open orders on the book. Customers who wish to cancel their orders may do so and any customer who wishes to not participate in the re-opening should cancel their orders prior to the resumption of trading,” a spokesman said during the shutdown.
The exchange reopened for trading at 3:25 PM ET, and closed as normal at 4:00. Despite the troubles, stocks closed slightly up for the day. It was unclear what caused the problem, but a source quoted by Reuters described the error as a “data feed issue.”
The shutdown brought sometimes vehement criticism from across Wall Street.
“This is such an embarrassment to the entire financial community. To have the Nasdaq go down as it has; to be down three hours—it’s one thing to be down for five minutes—to be down for three hours is absolutely inexcusable,” said Dennis Gartman, editor and publisher of The Gartman Letter.
“It reminds me of sitting at the US Airways terminal and hearing nothing from nobody and you’re getting angrier by the hour,” he said.
Former SEC chairman Harvey Pitt told CNBC: “It looked like Nasdaq was clueless about how to deal with this emergency.”
“Nasdaq has, in my view, serious issues and there are two particular problems here. The first is, is there technology up to the task. That’s number one and then the second is, that when technology goes bad, do they have an established crisis management program?,” Pitt said.
Within an hour of the shutdown starting, the Nasdaq options markets issued a “system update” saying they were recommending firms route all open orders elsewhere. An average of 1.6 billion shares have been traded on the Nasdaq every day this August, according to statistics from Sandler O’Neill.
The New York Stock Exchange halted trading in all Nasdaq securities at its request and canceled orders. The NYSE otherwise declined comment. The CME said it saw ‘no impact’ from Nasdaq’s trading halt.
“You can’t trade if you can’t get the quotes out,” said Rich Repetto of Sandler O’Neill Partners.
“They want everybody else to shut down Tape C trading so they can restart over at the Nasdaq and until they do they can’t restart”, said CNBC contributor Pete Najarian. Tape C refers to any securities traded over the Nasdaq.
“If I was back in the days of 10 years ago managing 300 traders I’d put the directive out to every one of them ‘we don’t put any orders in at the open’ … no one trades for 60 minutes,” said Joe Terranova, chief market strategist for Virtus Investment Partners and a CNBC contributor.
The shutdown of exchanges without an external crisis is rare, but a stray squirrel shut down the Nasdaq in 1987, according to the New York Times.
– Written by CNBC’s Matt Hunter. Reuters contributed to this report