NYSE Halts Trading: What You Need to Know About the NYSE Glitch

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The New York Stock Exchange halted all trading today due to an unspecified technical issue. A headline like that is never going to make you feel warm and fuzzy, particularly given its vagueness. Is the NYSE under cyber attack from a terror group? Or was the NYSE glitch caused by the tech guy accidentally spilling his coffee on the keyboard? No one knows for sure, and the lack of detail is unsettling.

Wall Street nyse glitch

On a day when the Dow is down by over 200 points, China’s market is imploding, and Greece is the closest it’s ever been to leaving the eurozone, the feeling is all the worse. It brings to mind the market closures following the September 11, 2001 terror attacks, or for the veteran investors out there, the 1987 market crash.

But here’s the thing: Had you not happened to be watching TV or scanning the news, you might have been blissfully unaware that the NYSE glitch had even occurred. And I can say this with the utmost authority: I was busily trading client accounts before and during the outage and had no idea the NYSE trading had been halted. And all of the stocks I was buying and selling were NYSE-traded stocks.

This goes to show how much the investing world has changed in recent years…and how relatively unimportant the New York Stock Exchange has become. As trading technology has evolved, volume has been leaking out of the NYSE and into competing exchanges…or to no exchange at all. Today, NYSE floor trading makes up about 25% of total NYSE composite volume. As recently as the late 1990s, that number was around 80%.

NYSE-traded stocks can be routed to the Nasdaq, BATS, Archipelago, IEX or to any number of other exchanges or dark pools. For most investors, this happens behind the scenes, deep in the “plumbing” of the financial system. And frankly, so long as your orders are executed quickly and at a reasonable price, there’s no reason for you to care.

My orders were efficiently routed to the BATS exchange by my broker, and I was none the wiser. It wasn’t until my orders were placed and I happened to look up at the headlines that I realized there was an NYSE glitch of some kind.

So, is there anything you need to do as an investor?

Maybe. If you had open orders, you might want to check to make sure they weren’t cancelled. It’s estimated that several hundred thousand orders might have been cancelled, and there is an outside possibility that yours might have been included.

But the key takeaway here is that the market closure, even if we find it was caused by a malicious attack, just isn’t a big deal any more. We have a lot of issues that are concerning — high valuations, potential Fed tightening, a meltdown in China, and the potential breakup of the Eurozone, to name a few — but stopped-up data plumbing at the NYSE just isn’t one of them.

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2015/07/new-york-stock-exchange-nyse-glitch/.

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