NEW YORK (Reuters) - Trading glitches on the New York Stock Exchange amid Tuesday's market rout caused the NYSE Group's NYX.N chief executive to defend the Big Board's hybrid system on Wednesday.
NYSE Chief Executive John Thain backed the new system, which is supposed to bring together the best of automated and human trading, in a television interview a day after the Big Board experienced major delays in response to massive trading volume.
“It had nothing at all to do with hybrid,” Thain told CNBC. “If anything yesterday proved that we still need people here and that really is what hybrid is all about.”
But others said that, despite the fine points of what went wrong, the Big Board’s reputation took a blow, just a week before sweeping new U.S. securities regulations come into effect.
“Clearly there would appear to be implications for the hybrid system and questions of reliability,” wrote Prudential Equity Group analyst Rob Rutschow in a note, adding that, although the exchange claimed hybrid was not the issue, “NYSE may suffer damage to its reputation.”
The trading glitches came amid turnover on the NYSE of about 2.41 billion shares -- well above last year’s estimated daily average of 1.84 billion.
The delays resulted from record traffic on the NYSE’s electronic routing system, called SuperDot, Thain said, and were not related to the hybrid system, which integrates the automated trade execution with the Big Board’s storied exchange floor.
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With hundreds of specialist trading positions recently eliminated, there were also questions on Wednesday of whether more feet on the ground at the Big Board could have averted the logjam.
“Some will argue that, with more floor traders, this could have been averted,” said Jamie Selway of New York-based White Cap Trading. “I would go the other way and say, with better technology, it would have been alleviated. But that’s precisely the debate that will arise from yesterday.”
The Nasdaq Stock Market NDAQ.O, the largest electronic U.S. stock exchange, said it did not suspend trading during the market rout.
“You certainly need people, but you need technology to support those people,” Nasdaq chief executive Robert Greifeld told CNBC following Thain’s comments on Wednesday. “Yesterday was really not unexpected. There will be others.”
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