Nasdaq Shuts Down Options Trading Due To High Volume
Nasdaq Kills Options Trading As Orders Flood In
Nasdaq cut its options trading off today after a “significant increase” in orders came in, overpowering the system. At 10:36 a.m. EDT the exchange made the decision to cancel all orders on the book and refrain from opening trading again at all today.
According to a statement from the exchange, “A significant increase in order entries inhibited the system’s ability to accept orders and disseminate quotes on a subset of symbols, which resulted in the NOM halt.”
According to CNBC, a source familiar with the situation said the high volume of orders had not been linked to any suspicious activity, such as high-frequency traders attempting to manipulate the system. However, the source indicated that the issue could have stemmed from an issue with an order going wild.
This is the second time this week that a technical problem has halted trading on the Nasdaq, and the exchange is definitely no stranger to technical difficulties.
Facebook IPO
Last year the Nasdaq was responsible for handling the initial public offering of Facebook Inc. (NASDAQ:FB) stock. However, technical problems struck the exchange on that day too, costing traders millions of dollars and leading to huge lawsuits.
Much the same issue caused the problem that day as traders were in a frenzy to buy the much touted stock of the social networking giant. If the exchange can’t handle high trading volume it could lead to companies questioning the viability of listing on it.
Twitter Inc. will not be a repeat of the Facebook IPO, as it is listing on the New York Stock Exchange under the (TWTR) ticker symbol. The NYSE has already informed the public that tests have been run and the exchange is ready for the extremely high trading volume that is expected to accompany the Twitter IPO which is rumored to be November 7th. We reported earlier this week that Scott Cutler of the NYSE has said that the exchange is taking measures to prevent another debacle like the Facebook IPO. Perhaps the Nasdaq needs to upgrade its equipment to handle the higher volumes of trading in today’s market.
