Nasdaq breakdown ramps pressure to take actions
WASHINGTON — The latest high-tech disruption in the financial markets ratchets up the pressure on Nasdaq and other electronic exchanges to take steps to avoid future breakdowns and manage them better if they do occur.
The three-hour trading outage on the Nasdaq stock exchange Thursday also can be expected to trigger new rounds of regulatory scrutiny on computer-driven trading. Investors’ shaky confidence in the markets also took another hit.
Questions about potential dangers of the super-fast electronic trading systems that now dominate the nation’s stock markets ripple again through Wall Street and Washington. Stock trading now relies heavily on computer systems that exploit split-penny price differences. Stocks can be traded in fractions of a second, often by automated programs. That makes the markets more vulnerable to technical failures.
The Nasdaq episode cracked the midday calm of a quiet summer day on Wall Street, sending brokers and traders scrambling to figure out what went wrong.
The shutdown appeared to occur in an orderly fashion and didn’t upset other parts of the stock market.
But it was a major embarrassment. While hardly as stunning as the “flash crash” that set off a steep and sudden stock-market plunge in May 2010, the Nasdaq disruption some are dubbing the “flash freeze” did stir memories of it.
