WASHINGTON -- The latest high-tech disruption in the financial markets increases the pressure on Nasdaq and other electronic exchanges to take steps to avoid future breakdowns and manage them better if they do occur.
The three-hour trading outage on the Nasdaq stock exchange Thursday also can be expected to trigger new rounds of regulatory scrutiny on computer-driven trading. Investors' shaky confidence in the markets also took another hit.
Stock trading relies heavily on computer systems that exploit split-penny price differences. Stocks can be traded in fractions of a second, often by automated programs. That makes the markets more vulnerable to technical failures.
The Commodity Futures Trading Commission expects to put forward next week a plan for new restrictions and oversight on high-speed trading, a person with direct knowledge of the matter said Friday. The person spoke on condition of anonymity because the commissioners haven't yet voted to open the proposed plan to public comment.
The Nasdaq episode cracked the midday calm of a quiet summer trading day on Wall Street. Brokers and traders scrambled to figure out what went wrong.
Nasdaq-OMX CEO Robert Greifeld told CNBC on Friday that unspecified, external factors caused the glitch, and that the exchange followed all the proper procedures to correct the problem.
"We all have to be aware of the other person not acting always in the proper way, and you have to have your system be able to handle defensive driving," Mr. Greifeld said. "We're deeply disappointed with what happened yesterday. We aspire to perfection. We want to get to 100 percent up time."
The shutdown appeared to occur in an orderly fashion and didn't upset other parts of the stock market.
On Thursday, only a few hours after trading ended for the day, the head of the Securities and Exchange Commission said she will work to finalize SEC rules that would subject U.S. exchanges to tighter oversight of automated trading.
"Today's interruption in trading, while resolved before the end of the day, was nonetheless serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants," SEC chairman Mary Jo White said.businessnews