Aug. 22 - The Nasdaq reopened after a three-hour trading shutdown placed another black eye on the securities industry. Stocks rallied when full trading resumed. Conway G. Gittens reports.
The Nasdaq takes another hit to its reputation - shutting down for more than 3 hours before resuming trade by the end of the session. America's second largest stock exchange blamed this halt on a technical glitch - but finding out the cause will be important, says Professor James Angel of Georgetown University. SOUNDBITE: JAMES ANGEL, PROFESSOR, GEORGETOWN UNIVERSITY (ENGLISH) SAYING: "Well, this is clearly a black eye for Nasdaq, but the real question is what caused it. Was it just a technology glitch? We've learn how to live with that. If it was caused by sabotage or hacking or some act of terrorism, well then it is very significant to find out who is behind it." Investors were left guessing as to why the 3,000 stocks traded on the Nasdaq couldn't be traded in the middle of the business day. And the impact wasn't limited to just the Nasdaq - with other exchanges not able to fill orders for Nasdaq-listed stocks as well. SOUNDBITE: JAMES ANGEL, PROFESSOR, GEORGETOWN UNIVERSITY (ENGLISH) SAYING: "When all the exchanges trade Nasdaq stocks they report it to the consolidated tape, but guess what, the failure of that consolidated tape, what we call the SIP or the security information processor - none of the exchanges could trade, so we've discovered, oh there is a single point of failure here, so we need to make sure that our ticker tape that we all rely upon is far more robust and redundant than it is already." The list of technology related outages is growing. The Nasdaq's reputation was pummeled for botching the Facebook IPO last year, the New York Stock Exchange suffered "the flash crash" back in 2010, and just this week a technical problem hit Goldman Sachs. Markets, however, have proven their resilience in the past and did so on Thursday - U.S. stocks closed higher when full trading resumed.