From the "flash crash" to the Nasdaq outage: technical problems that hit stocks and exchanges
A squirrel brought down the Nasdaq for about half an hour on Aug. 2, 1994, by chewing into power lines near the exchange's computer center in Connecticut. It wasn't the first time an unexpected technical problem had stopped trading or caused wild swings in the market, but today's problems tend to be more complex and more far-reaching than the ones caused by rodents. Trading on the New York Stock Exchange was halted for more than three hours Wednesday because of a technical issue.
FLASH CRASH
On May 6, 2010, the Dow Jones industrial average plunged 600 points in five minutes. The index eventually closed 348 points lower. Regulators said the dive was triggered by a computerized selling program. In April 2015, the U.S. government filed criminal charges against British futures trader Navinder Singh Sarao, saying he played a role in the crash. The U.S. Department of Justice said Sarao used an automated trading program to manipulate the market. Sarao was charged with fraud and commodities manipulation. Sarao has said he was merely good at his job.
BATS Global Markets IPO
On March 23, 2012, stock market operator BATS Global Markets tried to go public on its own exchange. But its stock plunged shortly after trading started, and BATS said it was having technical problems with trading of other stocks. Two days later, the company withdrew its IPO.
Facebook IPO
When Facebook went public on May 18, 2012, its shares were expected to start trading at 11 a.m. However they didn't open until a half-hour later, and some investors didn't know for hours if their orders had gone through. Nasdaq later agreed to pay a $10 million penalty to settle federal civil charges after regulators said its systems and decisions disrupted the IPO. It also set aside $62 million in the first quarter to reimburse investors who lost money due to technical problems.
Knight Capital
On Aug. 1, 2012, a Knight Capital software problem sent millions of erroneous orders to the New York Stock Exchange and caused 45 minutes of volatile trading and a loss of $460 million for Knight. The company took stock trading orders from big brokers like TD Ameritrade and E-Trade and oversaw trading of more than 500 NYSE stocks at the time. Knight Capital shares plunged in the following days and the company approached bankruptcy before it was taken over by high-speed trading firm Getco to form KCG Holdings. Knight paid a $12 million fine to settle charges it broke NYSE rules.
Chicago Board Options Exchange
On April 25, 2013, trading on the Chicago Board Options Exchange, the largest exchange for financial operations, was halted for the morning because of an outage caused by software problems.
Nasdaq outage
On Aug. 22, 2013, a technical problem stops trading on the Nasdaq for about three hours. Nasdaq said the problem was tied to its system for disseminating prices.