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Switch snafu stops NYSE
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October 26, 1998: 4:40 p.m. ET
A hardware glitch halts NYSE trade for 59 minutes; spillover hits AMEX, CME
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NEW YORK (CNNfn) - A glitch in the high-tech hardware system used to relay billions of buy and sell orders a day halted trading on the New York Stock Exchange for 59 minutes Monday afternoon, the first such stoppage in nearly three years.
"There is literally a switch that sits between our main switching and order processing system and the servers that support our work stations right at the point of sale -- that switch malfunctioned, and that's the essence of the problem we had," Robert Britz, the chief technology officer at the New York Stock Exchange, told CNN Monday.
The trading delay, lasting from 1:16 p.m. to 2:15 p.m. ET, came a little more than midway through what was a relatively lackluster session on Wall Street, but still cut into the momentum built up by the Dow Jones industrial average in the late morning.
Trading halted in mid-afternoon
The Dow was up 41.20 points when trading was stopped. And while the resumption of trading drew cheers from the silenced ranks of brokers and their runners, the index didn't hold its earlier highs and closed down 20.08 points at 8,432.21.
Spillover to other exchanges with issues and futures contracts linked to NYSE stocks came swiftly. The Chicago Mercantile Exchange halted trading of the S&P futures contract, and the American Stock Exchange delayed stocks of firms that also trade on the NYSE.
The Chicago Board of Trade, however, which doesn't have any comparable plan for action when a NYSE trading halt occurs, did not halt trades of Dow Jones index futures.
The Nasdaq stock market, which is electronically based, as well as some regional exchanges, were unaffected by the NYSE halt.
The halt caused a minor logjam on the floor when trading resumed, forcing backlogged brokers to line up to place orders on behalf of their customers.
"We took orders, orders queued up, and we sent them to the market later," said Alex Goor, president of Datek Online Brokerage Services. "The orders never stopped since people didn't have that much time to react."
Monday's interruption was the first technically based halt since a computer snafu on Dec. 18, 1995, delayed the start of trading.
Britz insisted the sole culprit behind Monday's stoppage was faulty hardware and not an inability of the exchange's technology to handle the stress of heavy trading volumes, which routinely soar to the hundreds of billions of orders.
In the last 15 years, Britz said, the NYSE had spent about $2 billion on technology upgrades.
"Even prior to this glitch, this was a very routine day," Britz said. "As luck would have it, this series of switches … are due for replacement. … This will be taken care of over the next three weeks."
Among other trade stoppages in recent years:
- Dec. 28, 1992: A fire outside the NYSE, caused by a welder, halted trading for 40 minutes. Earlier that day trading was halted for 14 minutes due to problems with the high-speed tape and ticker.
- Oct. 22, 1991: A power failure halted trading on the NYSE for 24 minutes.
- Nov. 23, 1990: An electrical failure tied up trades for more than 90 minutes.
- Nov. 10, 1989: A fire at a Con Ed facility halted trading for an hour on the NYSE.
The Nasdaq also has had problems with trading. In 1994, a squirrel gnawed on a cable outside the Nasdaq's computer
center in Trumbull, Conn., halting trading for 34 minutes.
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