| NEW YORK
NEW YORK Feb 13 The committee that oversees the
data processor that was at the center of a three-hour trading
halt in Nasdaq-listed stocks in August agreed on Thursday to
implement fixes demanded by the exchange, according to a source
familiar with the situation.
The fairness and transparency of U.S. equity markets depends
in part on three securities information processors (SIPs) that
provide investors with the same stock quotes and last sale
prices. Nasdaq OMX Group runs one SIP and two others
are run by units of IntercontinentalExchange Inc's NYSE
A software glitch crippled Nasdaq's SIP in August, forcing
the exchange to halt trading on its listed stocks. U.S.
Securities and Exchange Commission Chair Mary Jo White ordered
the exchanges to come up with protocols to improve the
resiliency of the processors.
In November, Nasdaq presented the SIP committee, which is
made up of representatives from all U.S. equity exchanges and
the Financial Industry Regulatory Authority, with a list of 10
enhancements needed to improve its SIP.
Weeks later, the exchange gave notice that it intended to
quit running the system at the end of its two-year contract
because talks over implementing the fixes were taking too long.
At a meeting in Bonita, Florida, the committee agreed to
implement all of the enhancements, having acted on only two of
them prior to that, the source said. It also agreed that the SIP
be registered as a limited liability company, similar to one of
the NYSE-run SIPs.
The enhancements include expanding capacity, improving its
testing environment, and enhancing information security. It will
take around two years to complete. [ID:nL2N0KO1AK}
It remained unclear whether Nasdaq will consider bidding to
operate the system, which the company's management has said
carries "infinite risk" and little reward, once its contract
expires, the source said.
Nasdaq spokesman Rob Madden declined to comment.
Both NYSE and BATS Global Markets have said they would be
interested in running the Nasdaq SIP, the costs of which come
out of the revenues from the sale of its data.
Establishing the SIP as an LLC would limit the operator's
liability for losses arising from any future issues.