Is High Frequency Trading to Blame for Nasdaq Halt?

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Aug. 22 (Bloomberg) -- Computer breakdowns shook U.S. equity markets again today as malfunctioning software that feeds data between exchanges prompted Nasdaq Stock Market to halt trading in thousands of stocks and options. Bloomberg Businessweek's Matthew Philips and KeeneOnTheMarket's John Voorheis comment on Bloomberg Television's "Money Moves." (Source: Bloomberg)

Difficulty there with john voorheis.

We're going to bring in our in turns, we will call him.

Matt, how much higher frequency trading is to blame?

I was trying not to say the word "blamed" but there is.

To answer the question that was just asked, we cannot put this back in the bottle.

These exchanges have built themselves to be able to function in this world, and to cater to the hft's. from what we have seen, this is a problem on the exchanges front.

The question is, to what degree will regulators do anything about this?

Or does the responsibility lie with the industry itself to self police and get some of these things tightened up?

Based on what you know now, and obviously, we are getting more details, are there any details that are reminiscent of the flash crash for you?

It looks like the nasdaq is having problems printing to the tape.

That means the information on the trading is not making it out.

That seems to be an internal problem.

What happens with the flash crash was from a participant trader.

A huge order was put in that triggered all of these stoplights, sell orders, and that cascaded.

We have preggers in place now.

This seems to be on the exchanges side, -- we have breakers in place now.

This seems to be on the exchanges side, which we have not really seen before.

If we have an algorithm that goes haywire and does something is not supposed to, like we saw with goldman, we are prepared for that.

This is a bit of a different beast.

Nasdaq is supposed to be the electronic technology exchange.

And now this is right in two years that we have seen issues.

I was going to say, unless you are bringing out the biggest i.p.o. in the world -- i mean, face but have the same issue.

Guys were shorting orders and not getting their reports for hours and hours, sometimes not until the afternoon on that.

Is this similar?

Things are stopped, just as they did.

We will see what happens afterward when they resume, however long that takes, whether there is going to be a huge dropoff in the dislocation.

To what degree does this industry to police itself?

Some of the people who are kind of experts on it in this industry will point out that mistakes happen all the time back in the old days when trade got confused and he went to settle up.

What i meant was for the trade to be 10 less and you never got that.

The headlines never rights to the level they have now.

It is not to say that electronic trading has suddenly opened up these problems that did not happen in a human-based environment tenor 15 years ago.

A very good point.

Let me ask you, john, you guys have an outcry market there, one of the few remaining.

Do you have issues like this on a regular basis, issues where you need to halt trading and deal with something?

I think it was a very good point, that recently you have seen these sorts of issues, not dealing with the algorithm terms, but with the exchanges.

To me, that is particularly troubling.

At the end of the day, a correlation exchange can provide liquidity.

And when they fail in that mission, it causes severe problems like you are seeing today.

If i were the nasdaq, i would be asking miti department exactly how this happened and what we need to do to prevent someone like this from ever happening again.

It seems like they would have asked those questions after the facebook ipo.

The new think they should have dealt with this kind of issue because it was so similar after facebook?

And by the way, if you're sitting in front of a bloomberg terminal, which many of the bankers and traders who watch this channel are doing, you're just seeing headlines scrolling across in the hundreds.

A few minutes now, officially as nasdaq halts all of the trading on the 200 or so stocks that are listed.

Not been able to print to the tape is as basic as it gets.

If they cannot handle that, i don't know what volumes were light today, but they have not been out of the park recently.

It is not like we are in 2007, 2008 days when trading volumes were 10 million shares a day.

It is almost half of that.

To not be able to print basic trade flow to the tape, that is

This text has been automatically generated. It may not be 100% accurate.


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