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‘This is going to be a recurring thing’

A man walks past the Nasdaq MarketSite in New York’s Times Square, Aug. 22, 2013. All trading on Nasdaq, the second-biggest U.S. stock exchange, was halted on Thursday shortly after midday due to a technical problem.


All trading on Nasdaq, the second-biggest U.S. stock exchange, was halted on Thursday shortly after midday due to a technical problem, the exchange said.

Opinions varied among brokerage managers on the impact of the outage:

Stephen Massocca, managing director, Wedbush Equity Management LLC In San Francisco:

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"Obviously we don't know what the cause is or what the problem specifically is yet. It's fortuitously timed at a point in the calendar where it might have little, if any of impact.

"But clearly as we continue to eliminate human beings from the execution of security trading, this is the problem you run into. Back in the days when I was hand filling out order tickets and keeping my positions in a binder by hand, I didn't have this problem unless the battery in my calculator failed. This is the problem with automating everything in that it is difficult to get things to be really fault tolerant."

"Goldman, Knight, it's a continuing theme. We have automated securities markets to the point where you are reliant on computers. This is going to be a recurring thing. It is difficult to have automated systems that don't have issues on occasion. Once again we don't know the cause and we don't know the full story at this point but it points to a mechanical issue somewhere – hardware, software, something. That is the problem with automation. It is something we are going to have to resign ourselves to the fact these events are going to take place given the level of automation that has come to security markets."

Mark Turner, managing director and head of sales trading at Instinet in New York:

"We have halted trading of the affected securities in our dark pool, I believe at this point most dark pools have probably done the same thing,"

David Lutz, trader, Stifel Nicolaus, Baltimore:

"We are seeing clients starting shorting a lot of ETFs just in anticipation that they can't get it reopened today. So there are still trades going on – not in the Qs because they are listed on Nasdaq – but we're seeing guys in the IWMs and the Spiders that are listed on the New York Stock Exchange.

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"My book of business is picking up because I'm all ETF, just because I've got guys coming in to try to short the indices as a hedge because they don't know what going on."

Jim Gorman, spokesman for exchange operator Direct Edge In Jersey City, N.J.:

"We are cooperating with a street-wide halt and our systems are operating normally."

Anthony Conroy, head trader for Convergex Group, a global brokerage company, in New York:

In response to: has it had a big impact on your trading today?

"So far, yes. Especially any time you have indecision, there's nervousness, so that nervousness is creating a little bit of volatility in the markets, and we're trying to figure out because you just don't know– is it going to be a reopening, are we down for the rest of the day?"

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Robert Stein, global head of asset management at Astor Asset Management LLC in Chicago:

"It's a good day to have another glitch, if you will, a quiet August with an upward bias in the market, so it could go unnoticed."

"It hasn't created any additional type of volatility in the markets either, so we're just sort of waiting to hear."

In response to: how significant a glitch do you think this could be?

"Not very. You would probably see more volatility if it was the type of glitch that was erroneous trades or people having uncertainty or lack of clarity on what their positions were. The biggest problem is when you're not sure what your positions are, as opposed to connectivity being down ...

"The bigger deal is when you're flying blind."

Jason Weisberg , managing director at Seaport Securities Corp. in N.Y.:

"Technology has flaws, but it could happen to anyone. It's their turn in the wheel. The reason the Stock Exchange (halted securities) was out of courtesy. If I had to guess, it is clearly out of courtesy and not because they don't want to step on their competitors. I don't think they want to do it in that fashion.

It slows thing down in Nasdaq stocks (trading on the NYSE), but that being said, it does make the case for listing shares on the new York Stock Exchange because there are humans to trade. And it does make a case for a need in an open outcry market in the U.S. equity market."

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