NYSE Trading Suspended by Nearly Four-Hour Outage

By Markets FOXBusiness

The New York Stock Exchange resumed trading shortly after 3:10 p.m. ET Wednesday after a nearly four-hour long outage caused all trades to be re-routed to other exchanges.

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The exchange stopped trading on all shares at 11:32 a.m. ET, and denied that problem was in any way related to a security breach of its computer systems. The exchange tweeted shortly thereafter that it was due to "technical glitches."

After the dust settled on Wall Street, and after the exchange executed the close normally, NYSE released a statement elaborating on what caused the suspension.

"The New York Stock Exchange and NYSE MKT experienced a technical issue and, consistent with our regulatory obligations, the decision was made to suspend trading as we worked to identify the cause and resolve it. The root cause was determined to be a configuration issue. Trading of NYSE-listed stocks continued on NYSE Arca and other U.S. trading venues throughout this process. We resumed trading on NYSE and NYSE MKT shortly after 3 p.m., and the market closed normally at 4 p.m."

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Not long after trading was suspended, Nasdaq declared "self help" against the exchange, meaning it routed all trades away from the NYSE and to other exchanges including Nasdaq and BATS. Meanwhile, NYSE's all-electronic ARCA and options markets remained open and unaffected by the issue.

Securities and Exchange Commission Chair Mary Jo White said the agency will continue to keep close tabs on the developments at the NYSE.

“We are in contact with the NYSE and are closely monitoring the situation and trading in NYSE-listed stocks,” she said in a statement. “While NYSE is working to resolve the situation, NYSE and NYSE MKT stocks continue to trade normally trough other trading venues.

A Nasdaq spokesperson said the exchange's systems were "operating normally and are trading all symbols including Tape A (NYSE) securities."

Speculation Wednesday held that hackers were to blame for the shutdown because the Wall Street Journal and United Airlines (UAL) also experienced troubles with their computer systems around the same time as the NYSE shutdown.

However, a law enforcement source told Fox News the technical glitch that prompted the halt at the exchange does not appear to be malicious, but federal law enforcement officials are continuing to monitor the situation.

U.S. equity markets continued to trade solidly in negative territory after trading resumed on the NYSE. The three major averages dropped more than 1%, with the Dow falling more than 250 points. 

The selloff on Wall Street came on the heels of increased worries about contagion around Chinese stock markets, which entered bear-market territory last week, and on Wednesday closed the session down nearly 6%. Traders also continued to closely monitor developments out of Greece as it pursues ongoing negotiations with its creditors about a bailout deal to prevent a collapse of its banking system. 

Aside from the concerns about cyber security at the historic exchange, Peter Kenny, chief market strategist at ClearPool Group, said trading halts deny investors access to liquidity, and that has its own kind of impact on the markets. 

"Under any circumstances where there is an unexpected trading halt, much less NYSE floor wide, investors and the broader market landscape are given an unexpected variable to price. That is rarely a positive and tends to undermine confidence," he said. 

The four-hour pause at the NYSE was the biggest stoppage to U.S. trading in two years. The last time a similar event occurred was in August 2013 during the so-called flash freeze at the Nasdaq. At that time, a technical glitch stopped trading on the all-electronic exchange for three hours.  

Wall Street’s Cyber Security Risk

After market participants had a moment to digest the trading halt, despite reassurances from the New York Stock Exchange, speculation immediately began about whether the action by the NYSE was purely the result of a technical glitch, or a breach of the exchange’s cyber security systems.

Derek Manky, lead threat researcher at Fortinet FortiGuard Labs who has worked with some chief security officers for major stock exchanges, said while a cyber attack could have caused the outage at the NSYE Wednesday, it’s best not to jump to conclusions until a definitive reason is identified.

“When incidents like this break, it takes awhile for discovery – experts have to go through logs to figure out exactly what the cause was. Most cyber attacks seem like technical glitches, that’s how a hacker gets into the system is by causing a denial of service attack, a crash, or something like that,” he said.

That said, Manky added that stock exchanges, especially ones like the NYSE, have robust systems in place, including firewalls, high response, low latency systems, and teams both inside and outside of the company, to prevent hacking incidences.

“It’s not like their doors are wide open to the outside. If anything, they might want to worry about some kind of internal threat,” he said. “There are always going to be attempts by hackers to get in the door. There will never be a silver bullet for cyber security, but we can try. And having a two-step plan is how we do that. Having experts on site and off site who can collaborate with companies and firms that might be under attack to work with, understand and stop the attack from happening is critical.”

However, not everyone in the cyber security community agreed.

Cendrick Leighton is the CEO of Cedric Leighton Associates, a Washington D.C. strategic risk management consultancy that advises multinational firms on cyber-attacks and risk management. He said he’s “very suspicious” of the timing of the NYSE’s trading halt.

“This is too coincidental. You have United, NYSE, and Wall Street Journal so my suspicion is something is going on here. My suspicion is this was a test run by a cyber-hacker or potentially from a nation state.”

Still, FBI Director James Comey insisted in a Senate Select Intelligence Committee hearing Wednesday that there is no indication, at this point, of a cyber attack.

“I actually think the Wall Street Journal piece is connected to people flooding their website in response to the New York Stock Exchange to find out what is going on,” he said. “But it looks, again, in my business, you don’t love coincidences. But it does appear that there is not a cyber-intrusion involved.”

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