NYSE Computers Crash

NYSE Computers Crash

Wired News Report

New York -- Oct. 26, 1998 PT -- Trading on the New York Stock Exchange, the premier stock exchange in the world, was halted for 59 minutes on Monday afternoon because of equipment problems.

Trading stopped at 1:16 p.m. local time and resumed at 2:15 p.m., the exchange said. Other US stock exchanges, including the Nasdaq and regional exchanges affiliated with the NYSE, continued trading.

An NYSE executive fingered a faulty switch as the culprit behind the shut-down.

"It was a pretty fundamental hardware problem and frankly nothing more than that," executive vice president Robert Britz told CNBC.

Once the switch had been replaced, Britz said, NYSE technicians had to reprogram the system to accommodate the device, accounting for the length of delay.

A floor trader said the initial malfunction interrupted service to some of the booths where specialist traders work.

"Some of them were down, some of them weren't," said the trader, who spoke on condition he not be identified by name. "Meanwhile a lot of the data was starting to back up."

The NYSE trades stock worth about US$5.4 billion in six-and-half hours each day. The loss of an hour could equate to about $800 million in lost volume, though The NYSE said it was too early to put an exact dollar figure on the loss.

"This was a relatively slow Monday," chief operating officer William Johnston told CNBC. "Hopefully the loss wasn't that great in terms of volume for our major member firms who had orders."

The Pacific Exchange in San Francisco said it received no advance warning of the shut-down, nor an explanation of the cause, though it said the NYSE did issue an alert before resuming trading. Of the 2700 securities the Pacific Exchange trades, 2300 are listed with the NYSE.

"Was it a problem? Yes," said Pacific Exchange spokesman Mo Shafroth. "But it came back up before the close, so people could close out their positions if they needed to. It would be nice if computer systems worked perfectly all the time, but that's not reality."

The only other mid-day trading halt on the NYSE came on 22 October 1991, when a power outage took trading down for 24 minutes.

Reuters contributed to this report.