Network failure interrupts quotes, trade data for NYSE stocks

Outage caused trading difficulties in the cash and options market

The New York Stock Exchange suffered a network hardware failure that interrupted the flow of stock prices and quotes from its exchanges for nearly half an hour on Thursday, the latest problem to hit data processors key to trading.

The NYSE said the problem affected its feeds for stock and options prices and quotes from 1:07 pm EDT to 1:34 pm EDT (1707 GMT to 1734 GMT). After shifting from its primary data center in Mahwah, New Jersey, to a backup data center in Chicago, the problem was resolved.

The outage caused some trading difficulties in the cash market and options market, with volume notably slowing in options activity. Traders said they saw a "crossing" of prices in certain issues, which is when the spread between the bid and offer price for shares inverts, preventing the matching of orders.

"It definitely was locking a number of markets and crossing a number of markets," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

In an alert to market participants, the NYSE, a unit of IntercontinentalExchange , said there was a "critical" issue due to a problem with the National Market System securities information processor, which delivers data on stock quotations and last sale prices.

Despite the outage, trading in NYSE-listed securities was not halted.

"Nothing notable that was called to our attention from position traders," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. "In terms of (whether there was) anything to be alarmed or concerned about, no."

A problem with Nasdaq OMX's securities information processor shut down that market or three hours last year, one of a series of problems that have affected market operations in recent years. The securities industry has been working on fixing those systems.

ICE operates three of the four data processing systems that disseminate quotes and trading data, including the Options Price Reporting Authority, or OPRA, which provides quotes and sale information through market data vendors for the options market.

That securities information processor was also affected, causing trading volume in the options market to slow for about 12 minutes, said Henry Schwartz, president of options analytics firm Trade Alert.

"Option flow averaged nearly 20,000 contracts per minute today, until 1:36 pm. ET when exchanges reported quote problems and option volume collapsed to near zero for several minutes," he said.

"No exchange halts were reported, but several brokers told their clients to trade with 'extreme caution' given the absence of linkage between exchanges and best bid/offer protection," Schwartz said.

Traders noted that a sudden surge in equity futures volume at CME Group Inc at 1:20 pm EDT (1720 GMT) occurred during the outage, but it was not clear whether it was related. More than 35,000 S&P 500 E-mini futures contracts changed hands in that one minute, the busiest minute of the session other than at the close of trading.