NYSE Resumes Trading After System Outtage
N E W Y O R K, June 8, 2001 -- It was a down day on Wall Street, but not just in the usual sense.
A software glitch that left traders able to buy and sell only about half the listed stocks on the New York Stock Exchange ultimately brought the exchange to a halt for more than an hour this morning. Additional bugs kept some stocks off the boards until mid-afternoon.
The closure slowed or shut down trading on other exchanges as well. But it wasn't only the the stumble in trading that left overall market performance weak. Poor earnings news from tech firm Juniper Networks also kept the indexes down.
When it was over, the Dow Jones Industrial Average was off 114 points, closing at 10,977. The Nasdaq was close 49 points lower at 2,215.
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The exchange opened normally at 9:30 a.m. ET, but the software glitch halted trades at 10:10 a.m. ET. Trading of most stocks resumed at 11:35 a.m., although some companies still were not trading until nearly 2:30 p.m. ET.
Exchange officials said the problems stemmed from software introduced into the NYSE trading system Thursday night. NYSE Chairman & CEO Richard Grasso declined to name the software company, saying the responsibility for the problem lay with the NYSE.
Overnight, a new release of a program was installed that acts as a bridge between orders sent to data processing sites and the trading floor. Grasso said the problem was noticed around 9:05, when it was apparent the display screens at the trading posts were not "opening" quickly.
About 10 minutes before the opening bell, it was decided to go back to the previous version of the software. That, the NYSE says, "should have been routine. It was not." At the opening bell, nine of the 20 trading posts were unable to process retail trades, or those from individuals.
After trying to resolve the problem for 40 minutes, Grasso decided to halt all trading in the interest of "fairness to all our customers." A reboot of the software didn't fully resolve the problem, with two posts trading about 10 percent of the 3,500 stocks.
'No Trades Were Lost'
It's not the first time a software upgrade has disrupted trading — a shutdown also took place Oct. 26, 1998. But Cary Leahy, senior analyst at Deutsche Bank, said this type of technical glitch was very rare.
As for investors, Grasso said "no trades were lost. They were held until the stocks were opened." The NYSE chairman said there has been no call for any compensation to investors by the exchange.
Among the Dow components that didn't open on the NYSE due to the outage were the stocks of such well known companies as 3M,Eastman Kodak and Exxon Mobil. All three traded brisklyfollowing the NYSE's reopening.
During the shutdown, the Dow continued to fluctuate due to trading in technologystocks Intel and Microsoft, which are also traded on the Nasdaq stock market.
In addition, other stocks that aren't part of the Dow did not stop trading because they are listed in other exchanges. The stock of financial firm Merrill Lynch, for example, continued to trade on the Chicago Mercantile Exchange.
Nasdaq issues were unaffected, Scott Peterson, spokesman for the computerized exchange, told wire services. However, the Nasdaq did experience lighter volume as its computer systems process about 10 percent of the NYSE's trades, Peterson said.
The Chicago Board Options Exchange halted trading in options ofNYSE-listed stocks shortly after the New York exchange announcedits halt. The Chicago Board of Trade also halted trading in DowJones futures, while across town the Chicago Mercantile Exchangestopped trading in S&P 500 futures.
The options and futures resumed trading once the NYSE reopened.
ABCNEWS' Ramona Schindelheim and Jon Bascom contributed to this report