A Glitch in the Financial Matrix

ByABC News
February 28, 2007, 3:17 PM

Feb. 28, 2007 — -- We live in an age when money just isn't what it used to be.

Today, trillions of dollars move around the globe each day not as paper currency in armored cars but as little bits -- digital ones and zeros -- flying through cyberspace.

It's great when it comes to speed. Whether you're a hedge-fund manager buying millions of dollars worth of stock in a few minutes or an average Joe withdrawing $20 from an ATM far from home, you enjoy the benefits of electronic transactions.

But the digital dollar age comes with some pitfalls that weren't big concerns in the past.

What happens if one of those computers moving money across a wire puts a decimal point in the wrong place, forgets how to do basic math for a few seconds or just isn't getting the information it needs to do its job?

The world found out yesterday.

The New York Stock Exchange is pretty simple.

It's just a big black scoreboard for the world's most important money game. Black background. Yellow LED lights. Oh, and trillions of dollars in value flashing across its expansive face from 9:30 a.m. until 4:00 p.m. ET every weekday of the year, excluding holidays.

A few of those lights are easily recognizable by pretty much anyone who's turned on a television in the last decade -- the lights that show the current value of the Dow Jones industrial average.

There are a group of lights that show the current value of the index and just below them a group of lights that show how much the index has moved up or down during the trading day. Those lights are fed by a data stream provided by Dow Jones global indexes.

But yesterday, starting at about 1:50 p.m. the lights were being fed numbers that just weren't right.

Dow Jones says that unusually heavy trading of the 30 component stocks that make up the Dow caused a 70-minute lag in correctly calculating the value of the index. Their main computer system wasn't getting what it needed to put the "real" numbers up there on the Big Board.

As one might imagine, a 70-minute lag in the era of fast electronic trading is a big problem. Especially on a day when the market is teetering on the precipice of a notably bad move down.