A cascading problem involving stock price listings crippled the NASDAQ on August 22, driving down trading activity for over two hours and raising fresh questions over the dependability of automated systems in the 21st century stock market. According to various news sources, NASDAQ officials are still looking into a problem that some believe began with a single piece of software.
Roughly $5.7 trillion worth of stock trades were halted during the day. Panic spread through the financial social media community, prompting concerns of a protracted technological crisis. It wasn't just the NASDAQ that was affected. Given the widespread use of the exchange's services, other markets such as the NYSE Euronext board were impaired.
During the chaos, however, NASDAQ officials declined to begin cancelling trades that participants feared were being impaired by the problems. Instead, a statement was released advising clients on the issues and giving them the option to either cancel or ride out the delay. Operations resumed as normal later in the day, but economists are already saying that the slowdown has created a negative perception of the market that might be tough to beat. Furthermore, some traders and investors might feel less inclined to participate at all if they can't react as quick to problems such as this in the way that high-frequency trading (HFT) firms can.
"The market being down for an hour is just shocking. It's not the kind of thing that's happened before," David Lauer, a stock market consultant, told the U.K.-based newspaper The Guardian, said in an interview. "You're not going to have confidence in the markets and keep your life savings and retirement in the markets if you keep seeing this happen."
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