The New York Stock Exchange said a botched technology upgrade, not a hacking attack as some feared, caused Wednesday’s outage that froze one of the world’s biggest equity markets.
While conducting a software revision, something went wrong and customers started having trouble communicating with NYSE’s computers after 7 a.m. New York time, according to an autopsy of the event released by the exchange Thursday. The exchange tinkered with the setup, but further trouble ensued, leading to a full halt of trading at 11:32 a.m. that lasted more than three hours.
“We appreciate your support and I am sorry for any inconvenience or anxiety that we caused you yesterday,” NYSE Group President Tom Farley wrote in a message Thursday to corporations who list their shares at the exchange. “Consistent with our rules and in coordination with our management team, I made the decision to suspend trading because, given the anomalous behavior of the system, I was not comfortable that our marketplace was appropriate for your listed securities.”
NYSE was in the process of introducing software needed for a July 11 industrywide test of improvements to something called the securities information processor, or SIP -- the central database that collects U.S. stock prices. The SIP is being upgraded to print prices in smaller slices of a second, reflecting the high-speed pace of modern trading.
Given all the concerns about hacking, “it’s not difficult for people to make the connection and jump to that conclusion,” said Tom Hainlin, a strategist at U.S. Bancorp’s Ascent Private Capital Management division. “That’s why NYSE had to come out and say it was just an internal issue.”
The breakdown was the worst U.S. exchange outage since Nasdaq OMX Group Inc.’s August 2013 software malfunction that froze trading for thousands of companies for hours. This week’s NYSE incident was less severe because NYSE-listed companies continued to trade on dozens of other markets, whereas the Nasdaq malfunction caused a nationwide halt.