--NYSE won't resume trading in 216 issues
--NYSE won't hold normal closing auction for the affected
securities
--Exchanges route orders away from NYSE for most of Monday
(Updates with context throughout)
By Chris Dieterich and Jacob Bunge
NEW YORK--Big Board operator NYSE Euronext (NYX) will not resume
trading in more than 200 securities affected by a trading glitch
reported shortly after the opening bell, and it will not hold
normal closing auctions in these issues.
Instead, NYSE said it will determine the official closing price
for each of the affected 216 securities based on consolidated
reading of last-sale prices, the exchange said in a statement late
Monday.
Soon after the market opened Monday, the NYSE alerted traders
that its equity market was experiencing an outage in the matching
engine for buy and sell orders and that 216 issues were affected,
including companies such as CVS Caremark Corp. (CVS), Lazard Ltd.
(LAZ) and United States Steel Corp. (X).
Other exchanges including BATS Global Markets, Nasdaq OMX Group
Inc. (NDAQ) and Direct Edge Holdings LLC stopped sending orders to
the NYSE soon after the open. Exchanges can decide not to route
orders to other exchanges when another market is slow to respond to
incoming orders, or if the flow of information to and from the
exchange is disrupted.
Even NYSE Euronext's own all-electronic NYSE Arca platform
stopped routing orders to the Big Board in an alert at 11:29 a.m.
EST.
All those exchanges had resumed routing orders to NYSE by late
in the session.
The problem arose as the exchange operator transferred a raft of
issues to its new "matching engine," a move designed to standardize
the way NYSE processes orders across its different venues,
according to an NYSE spokeswoman. Since September, some 800 stocks
have made the switch to NYSE's new matching engine, which is known
as the "universal trading platform."
The affected stocks represent just a fraction of the 3,825 total
listings that trade on NYSE's floor, according to an exchange
spokeswoman.
The official closing price set by the primary market--the NYSE
in the case of the stocks affected by Monday's technology
problem--is important for stock indexes and mutual funds. Funds use
closing prices from listing exchanges to calculate net asset
values, while indexes use closing prices to calculate their daily
values.
Brokers said the episode arrived during an otherwise quiet day
for U.S. stock markets, and trading activity was generally
unaffected as transactions were sent to other exchanges.
"We have the ability to trade in other places and steer
business, so the impact from a trading perspective for a customer
has been minimal," said Joseph Cangemi, head of electronic trading
for Convergex Group.
NYSE's shortfall of incoming orders meant NYSE saw its market
share drop than less than half of a normal day. A total of so far
127 million shares traded on NYSE as of 3:00 p.m., or 4.9% of total
market share, according to data from BATS. On an average day, NYSE
represents more than 10% of total market volume.
The technical difficulties put the NYSE's trading volume well
behind electronic rivals Nasdaq, BATS and Direct Edge on Monday,
and each exchange saw more traffic than average.
Shares of the exchange operator rose 41 cents, or 1.9%, to
$23.36 in afternoon trading.
Write to Chris Dieterich at
christopher.dieterich@dowjones.com
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