Friday, August 23, 2013

Equity Trader Alert #2013 - 77
Post Mortem: NASDAQ Trading Halted in Tape C Securities; Markets Operating Normally

What caused the trading halt in NASDAQ-Listed (Tape C) securities?

At 12:03, ET, the UTP Securities Information Processor (SIP), which processes quote and trade information for NASDAQ-securities, ceased disseminating all quote data via the UTP Quotation Data Feed (UQDF).

The NASDAQ Stock Market^® (NASDAQ^®), in cooperation with the UTP Operating Committee, invoked established procedures for "Emergency Market Conditions System Related to the UTP SIP." All UTP participants agreed and approved the decision by NASDAQ to issue a regulatory halt for all trading in NASDAQ-listed securities (Tape C). The last security was halted at 12:23, ET. All UTP participants, including NASDAQ OMX BX^SM (BX^SM) and NASDAQ OMX PSX^SM (PSX^SM) halted trading in NASDAQ-listed securities at that time.

Based on the equity UTP SIP issue, all trading was halted on our options markets - NASDAQ OMX PHLX^SM (PHLX^®), The NASDAQ Options Market^SM (NOM), and NASDAQ OMX BX Options^SM (BX Options^SM).

The UTP SIP resolved the technical issue at 12:24, ET.

Although the data feeds were operational, NASDAQ as the listing market of Tape C securities, worked with UTP participants, other market participants and regulatory entities to evaluate scenarios to effectively re-open the market. Once there was an accepted plan for re-opening the market, connectivity to the SIP was made available to the UTP participants.

Trade resumption occurred as follows (all times ET):

• 14:00:00 - NASDAQ brought the UTP SIP back online and began confirming connections with NASDAQ OMX systems and the other UTP SIP participants. During this time a halt code of T6 was issued for all NASDAQ-listed securities.
• 14:45:00 - A quote only period began for symbols AAME.
• 15:00:00 - Trading was opened in AAME for a 10-minute observation period.
• 15:10:00 - The remaining NASDAQ-listed symbols were released for a 15-minute quote only period.
• 15:25:00 - Trading resumed in NASDAQ-listed securities.

BX and PSX equities markets resumed trading based on resumption of the primary market. Based on the successful resumption of equities trading, NASDAQ resumed options trading on PHLX at 15:35:00 with NOM and BX Options following at 15:40:00.

Did NASDAQ cancel orders during the trading halt?

No. NASDAQ rules allow customers to manage their orders during a halt. There were no technological issues with The NASDAQ Stock Market trading system. Customers retained the ability to cancel and enter orders during the halt. In addition, market operations staff was available to cancel orders manually for those customers who wished to do so. NASDAQ reminded customers of the option to cancel open orders throughout the duration of the halt via our system status alerts.

Will any trades be broken as a result of the trading halt?

NASDAQ OMX, in conjunction with the other UTP exchanges, declared all trades executed between 12:14:03 ET and 12:23:31 ET will stand.

Were NASDAQ OMX proprietary market data feeds affected?

No, all NASDAQ OMX proprietary market data feeds were operating as normal.

Did the NASDAQ closing cross operate normally?

Yes, the NASDAQ Closing Cross was completed as normal and the extended trading session began.

Was the trading pause a result of any market manipulation?

NASDAQ and the UTP SIP have no evidence of an attempted intrusion into UTP SIP systems or of an unusual burst of quotation or trading messages in connection with yesterday's events.

Where can I find more information?

• Refer to UTP Vendor Notice 2013-9.
• For trading questions, customers may contact their Transaction Services Market Sales representative at +1 800 846 0477 or NASDAQ OMX Trading Services at +1 212 231 5100 for questions.
• For market data questions, customers may contact their Global Data Products Sales representative at +1 301 978 5307, option 1.