A technical glitch caused an outage of around 15 minutes on real-time prices for Nasdaq listed stocks, including Apple Inc and Google Inc , for many investors on Thursday, traders and multiple industry sources said.
Nasdaq said at 1:42 p.m. in an alert to traders that it was investigating an issue involving the Universal Trading Platform's (UTP) centralized securities information processor (SIP) data feeds, which consolidate and display market data for Nasdaq-listed securities from all trading venues.
Shortly after, Direct Edge, the No. 4 U.S. equities exchange, said it had halted trading in all Nasdaq order books. It said about 10 minutes later that all trading had resumed.
U.S. exchanges and alternative trading systems use UTP to quote and trade Nasdaq stocks. Those that do so must provide their data to the SIP for data consolidation and dissemination to traders that subscribe to the data feed.
The outage meant that continuous quotations and continuous last sale information from all market centers trading Nasdaq-listed securities was unavailable to as many as 2.5 million traders, said Eric Hunsader, founder of trading software and technology firm Nanex.
NYSE-listed securities, which are on a different data feed, were unaffected.
Hunsader said the reason behind consolidated feeds was to make market data affordable to the average investor.
Traders can also subscribe to direct data feeds from exchanges, rather than relying on the consolidated feeds. The direct feeds were unaffected by the UTP outage.
"This is a great example of the two-tiered market that we have developed," said Joe Saluzzi, co-head of trading at Themis Trading.
"There are the 'haves,' who subscribe to all of the private data feeds and various hardware and software and spend a ton of money, and then there are the 'have-nots,' which are the public who rely on the SIP," he said.
Data on quotes from the UTP SIP were stopped showing from 13:37.24 to 13:48.19, and data on trades were out from 13:36.55 to 13:51.14, said Hunsader, who maintains a blog where he posts frequently on sudden, computer-driven moves in markets.
A Nasdaq spokesman declined to comment. Spokesmen for Direct Edge and NYSE Euronext had no comment, and a spokesman for BATS Global Markets, the No. 3 U.S. equities exchange, was not immediately available.
In September, Big Board operator NYSE said it would pay $5 million to settle with the U.S. Securities and Exchange Commission after software issues and compliance failures allegedly led to some of the exchange's customers receiving access to market data faster others.
The SEC said at the time that early access to market data can lead to "a real and substantial advantage."
An SEC spokeswoman declined to comment on the UTP issue on Thursday.
(Reporting By John McCrank; Editing by Bernard Orr)