NASDAQ hit by second trading outage

NASDAQ OMX Group has been hit by its second trading outage in two weeks.

A memory failure with NASDAQ hardware affected the company’s securities information processor (SIP), prompting a brief freeze in trading of some stocks, NASDAQ says in a media statement. Trading in stocks with symbols ranging from PC to PZ was halted between 11.35 am and 11.45 am New York time.

‘A preliminary review of the incident found the SIP experienced a hardware memory failure in a back-end server at 11.35 am ET, affecting price quotes for a limited range of Tape C securities,’ NASDAQ says. ‘The system successfully failed over [switched to a backup] and operated normally to disseminate price quotes.’

The six-minute outage on Wednesday comes two weeks after a three-hour trading freeze affected thousands of NASDAQ-listed stocks. The SIP, which acts as the central data feed for all stocks on the exchange, was also at the heart of the August 22 outage.

NASDAQ said in a statement last week that the August outage was caused by ‘unprecedented events that overwhelmed the processing capacity of the SIP’, pushing the system beyond its tested capacity.

A committee investigating the August outage met yesterday, hours after the latest freeze, to discuss short-term actions aimed at preventing such outages, or limiting their impact. The committee says the SIP will increase the frequency of testing and ‘manually terminate connections if unusually high traffic is experienced on a single port.’ 

The committee also says the SIP ‘implemented a solution that will automatically disconnect the front-end and back-end processors when a failover occurs.’ 

Following the August freeze, the SEC started an informal probe. Commission chairman Mary Jo White said she would call a meeting of exchange leaders and other market participants with an aim to ‘advance rules that the commission proposed earlier this year regarding new standards for the trading and other systems that are central to the integrity of our markets.’