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NYSE, Amex Trades End Early

A malfunction in the order system closes the stock exchanges four minutes prematurely. Nasdaq is not affected.

June 02, 2005|From Bloomberg News and Reuters

Trading on the New York and American stock exchanges was halted four minutes before the close Wednesday because of an order system malfunction.

The glitch meant that investors who had expected to buy or sell at the day's final prices -- using so-called market-on-close orders -- had those orders canceled.

It was the NYSE's first unscheduled early close in more than seven years.

The Nasdaq Stock Market said trading in its issues wasn't affected.

The system trouble came at the end of a session that saw share prices rise sharply in active trading.

A trading floor source said the problem originated with the Securities Industry Automation Corp., which disseminates market data and runs computer trading systems.

SIAC is a technology center jointly owned by the NYSE and the smaller American Stock Exchange.

The NYSE, in a short statement, blamed a "communications problem" for the halt in trading at 3:56 EDT. It did not elaborate.

Shortly after the halt, the exchange said it planned to restart trading later in the afternoon to complete the session. Traders remained on the floor more than 45 minutes after the regular closing time, awaiting instructions from officials.

But the restart was canceled, and the NYSE said trading would resume this morning at the regular time.

The NYSE last closed early Oct. 27, 1997, when the Dow Jones industrial average fell 550 points, or 7.2%. That triggered a trading halt mandated under "circuit breakers" the NYSE adopted after the 1987 market crash.

The last halt caused by a computer problem was June 8, 2001. Trading was suspended from 10:10 a.m. to 11:35 a.m. because of systems trouble.

The pace of trading activity typically increases near 4 p.m. as market-on-close orders are filled.

On Tuesday 224.3 million shares changed hands in the final 30 minutes at the NYSE, almost double the activity during any other half-hour interval.

The glitch could cost some investors money if they had intended to buy at the end of trading Wednesday and share prices continued to surge today.

"Usually, if you don't get a trade done at the end of the day and the stock moves against you the next day, it has an impact," said Corey Geog, head of trading at State Teachers Retirement System of Ohio, which oversees $57 billion.

The malfunction comes six weeks after NYSE Chief Executive John Thain proposed the merger of the world's largest stock market with Chicago-based Archipelago Holdings Inc., which operates an electronic market.

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