Five days after the “Flash Freeze” on Wall Street, the two exchanges at the center of the incident remain at odds over what caused the bizarre three-hour trading halt.
According to Reuters, the Securities and Exchange Commission has pushed NYSE Euronext (NYX) and Nasdaq OMX Group (NDAQ) to craft a timeline of the incident, but the fierce rivals have a different understanding of what happened before and during the freeze, with each side blaming the other.
The disagreement highlights continued confusion over the Flash Freeze, which market structure experts blamed on the increasingly fragmented and overly complex trading structure.
Before the halt occurred, there were communications issues between Arca, NYSE’s electronic market, and a Nasdaq-operated system that consolidates stock quotes and distributes them, known as the Securities Information Processor, or SIP.
Nasdaq believes connectivity problems at Arca sparked the freeze in the SIP, which led the exchange to shut down the connection before the processor froze, Reuters reported.
However, NYSE believes the connectivity problems are routine and exposed a flaw in Nasdaq’s systems, the wire service reported.
NYSE declined to comment, while a Nasdaq spokesperson wasn’t immediately available to comment.
The incident was “serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants. The commission is determined to enhance the safeguards necessary for strong market systems,” SEC Chairman Mary Jo White said in a statement last week.