| NEW YORK, June 18
NEW YORK, June 18 OMX Group has made
changes to the system that caused a three-hour trading halt in
Nasdaq-listed stocks last summer, to make it more robust and to
limit possible future outages to 10 minutes, a company executive
said on Wednesday.
The exchange operator now hopes to continue running the
system, called a Securities Information Processor (SIP),
reversing direction from November when it said the risks of
doing so would outweigh the rewards, said Brian Hyndman,
Nasdaq's head of global information services.
"We feel we are in a much better spot today, so we will move
forward. We do want to be the processor," he said at the
Securities Industry and Financial Markets Association's SIFMA
Tech conference in New York.
U.S. corporate stocks are either listed on the Nasdaq or on
the New York Stock Exchange, but can be traded on any of the 11
U.S. stock exchanges. SIPs provide investors with stock quotes
and last-sale prices for Nasdaq-listed stocks across all venues.
There are separate SIPs for NYSE-listed stocks, and for options,
both run by units of NYSE.
When a software glitch hit the Nasdaq-run SIP in August,
investors who did not subscribe to the exchanges' proprietary
data feeds were in the dark as to what the best bids and offers
were for Nasdaq stocks. To maintain a fair market, the exchange
shut down trading in its listed securities, which include Apple,
Google, and Facebook, for hours, prompting concerns about the
complexity, and ultimately the fragility, of the market.
Hyndman said technical outages are expected from time to
time but that what really disturbed regulators was the amount of
time it took to get the market back up and running.
An independent auditor hired by Nasdaq recommended a number
of fixes to make the system more robust, but implementing them
was an issue, he said. The SIPs are run by Nasdaq and NYSE, but
committees made up of members all of the exchanges must approve
decisions on finances and systems upgrades, with the costs
coming out of revenue from the sale of the SIP's data.
Hyndman said that at the time, the SIP committee did not
seem engaged in the process, causing a frustrated Nasdaq to give
notice it would end its contract to run the system in two years.
The committee eventually approved the fixes, and Nasdaq has
put several in place and will implement others over the next 18
to 20 months, he said.
"It's not perfect - there are risks with any system - but by
the end of this month, if we do have an outage, we feel like we
can be back in a fairly short amount of time."
Nasdaq will have to bid for the SIP contract, which the
committee put up for tender in November when the exchange gave
its termination notice. Both Intercontinental Exchange's
NYSE and BATS Global Markets have also said they are interested.
(Reporting by John McCrank; Editing by Steve Orlofsky)