Squirrels, hackers and Facebook: Because of what the "exchange" falls

The New York Times published an interesting timeline , which marked the dates of major failures on American exchanges since the 60s of the last century. Sometimes the causes of failures were very original. More information about what can "drop" the stock exchange, in our today's material.

Stopping the stock exchange computer due to human error, 1967

According to media reports, the New York Stock Exchange has temporarily returned to the verified manual method of recording information about transactions, since the error of the IBM 7010 operator led to incorrect display of information in the system — some transactions were missed, some were “duplicated”. As a result, the “specially trained” girls-typists of the exchange entered into the business (there were 24 of them altogether), who began to record information manually - this made it possible to quickly resume trading.
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Report on stock exchange glitch in the newspaper

Stray protein "turned off" the Nasdaq system, 1987

On December 9, 1987, a failure occurred on the Nasdaq Stock Exchange, as a result of which the service of quotations of the National Association of Securities Dealers did not work for 82 minutes. According to the representatives of the exchange, the abnormal situation led to the fact that more than 20 million different stocks stopped participating in the auction.

The main computer center was located in a building in the city of Trumbull , Connecticut, and the reason for its stop was a sudden power failure. As a result, the mainframes of the exchange were disconnected, and the building's electrical network was damaged, which did not allow the standby generators to start automatically.

Other exchanges were also affected by the failure of the Nasdaq - traders were forced to temporarily make deals by phone, this method was used before the widespread use of electronic trading systems.

The reason for the failure was the stray protein, which gnawed through the wiring - this was the last thing she did in life. The animal's body was discovered by electricians of the company United Illuminating in the process of restoring power supply.

The bugs of the trading system and ... again, the proteins drop Nasdaq, 1994

Due to a series of failures in 1994, traders massively began to express their dissatisfaction with the quality of the work of the Nasdaq exchange system. Among the reasons for trading halt, various trading system bugs were first called, but one of the failures that lasted 34 minutes was again caused by a squirrel, which again entered the computer center in Trumbull.

After that, the New York Times released a note called “Bugs and Proteins Destroy the Nasdaq Image”, and traders actively complained about the current situation, which even prompted the Congressional Securities Monitoring Committee to check the reliability of the second largest US stock exchange.

Switch failure stopped trading on the New York Stock Exchange, 1998

On October 26, 1998, the New York Stock Exchange stopped trading for almost an hour due to infrastructure failure, which led to incorrect distribution of trading information. Representatives of the exchange said that the error was caused by the incorrect work of a group of switches, transferring orders from brokers and traders to the trading system of the exchange.

The consequence of the failure was also the suspension of trading on other American stock exchanges, but a big panic was avoided due to the fact that the total trading volume on this day was small.

The transition to decimal prices was postponed due to the incorrect operation of the Nasdaq system, 2000

At the turn of the century, large changes took place in the American stock market, one of the most noticeable was the transition to the decimal number system with a change in the minimum tick size from 1/16 of a dollar (0.0625 dollar) to $ 0.01 per share. This made it possible to reduce the minimum difference between the purchase and sale prices, leveling the trading advantage of market makers - as a result, the liquidity of the market increased.

However, as the media found out , in 2000, the Nasdaq exchange was unable to start trading on the new system in the previously announced period due to the fact that its SelectNet trading system starts to work incorrectly at large trading volumes, which can lead to delays in the execution of orders and even a complete halt in trading.

Hackers hacked Nasdaq, 2001

In 2001, it became known that unknown hackers managed to penetrate one of the Nasdaq systems designed to provide services for corporations. This system was not connected with the trading core of the exchange, so the attackers did not get access to information about transactions, but financial market participants were concerned about the degree of protection of their data.

New exchange BATS stopped trading its own shares due to a failure, 2012

Founded in 2005, the BATS stock exchange in March 2012 suspended trading on its site with its own shares due to a series of computer problems. As a result, the company even withdrew its initial public offering (IPO), which canceled bids for the purchase of its shares, and those traders who had already bought them, temporarily could not sell this asset.



BATS Trading Hall

Facebook IPO "broke" the Nasdaq system, 2012

On the day of the Facebook IPO, the start of trading on the Nasdaq was delayed by 3 hours, and after the start of trading, the system continued to work incorrectly for some time, in particular, it lost its alerts about the execution of transactions. Representatives of the exchange acknowledged that the problems were related to the IPO, but said that the problems in the trading platform did not affect the value of the shares.



The first day of trading Facebook shares ended at $ 38.23 per share, with an opening price of $ 38 - the result has upset many investors.

A series of failures and hacker attack hit Nasdaq reputation, 2013

In 2013, the Nasdaq again experienced technical problems, which even led to a complete halt in trading for several hours. In addition, the media learned that the computer system of the exchange was hacked by hackers who had penetrated it for two years, remaining unnoticed.

All this led to the fact that talking about the technological lag behind Nasdaq (where IT company stocks are traditionally traded) from competing sites like BATS and Direct Edge.

An error in the operation of the NYSE trading system stopped trading for 3.5 hours, 2015

The most recent failure happened quite recently - July 8, 2015, when an error in the operation of the trading system of the New York Stock Exchange led to a 3.5-hour halt in trading. According to White House spokesman Josh Ernest, President Barack Obama was informed about the halt in bidding. Members of the State Commission on Securities and Stock Market also said that they are closely monitoring the situation.



On the same day, United Airlines reported serious technical problems (flights to the United States were suspended for several hours), and The Wall Street Journal’s website did not work for several hours.

Failures periodically occur not only on American exchanges, but also on trading floors in other countries, for example, on the Moscow Exchange. Errors often lead not to stop trading, but, for example, to incorrect display of trade data or incorrect calculation of the collateral to hold a position (an error can even lead to premature closing of the transaction)

In order to minimize possible damage, brokerage companies are developing various systems to protect customers. We will talk about how similar protection is implemented in the ITinvest MatriX trading system in one of the following posts (you can briefly read about it here ).