Nasdaq says human error behind latest trading snafu

Reuters

By Rodrigo Campos

Oct 29 (Reuters) - Nasdaq OMX Group said humanerror left the U.S. exchange unable to transmit index values fornearly 45 minutes on Tuesday, leading to a temporary halt inoptions trading on some stock indexes.

Index values for the Nasdaq Composite, Nasdaq 100, PHLX Semiconductor, PHLX Oil Service Sector and PHLX Housing Sector were unavailable to thepublic for almost 45 minutes.

The lack of data forced the Nasdaq to halt options tradingin those indexes on Nasdaq's PHLX and Nasdaq Options Marketexchanges. Trading in those options was halted around 12:15 p.m. and restored about 1 p.m. EDT (1700 GMT).

The Nasdaq 100, one of the indexes that was brieflyunavailable, is the benchmark for the PowerShares QQQ Trustexchange-traded fund, one of the most heavily tradedETFs in the U.S. market.

"The disruption was caused by a human error performing anoperational function which resulted in the incorrect delivery ofdata ...," Nasdaq said.

The error "limited the ability of the system to distributeindex data," the exchange said.

The exchange said its Global Index Data Service "experienceda brief disruption of service" that did not affect equityexchange operations. Nasdaq was still able to calculate indexvalues, just unable to distribute them.

The exchange has struggled to repair its reputationfollowing some high-profile interruptions, most notably a totalexchange shutdown for three hours on Aug. 22 and last year'sbotched initial public offering of Facebook Inc.

"I don't know what it is, but it appears they have anunusual proportion of technical problems there," said StephenMassocca, managing director at Wedbush Equity Management LLC inSan Francisco.

"You would think they would be on their tippy-toes makingsure everything was absolutely correct over there ... at thispoint, it's more than just luck."

The Securities and Exchange Commission said it wasmonitoring the situation.

"We have been in contact with market participants as is ourstandard practice and monitoring developments as appropriate,"said SEC spokesman John Nester.

According to options analytics firm Trade Alert, in NDX,4,932 calls and 14,000 puts traded through 3:04 p.m. with lessthan one hour left of trading, below the recent combined dailyaverage of 42,000 contracts.

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