Options trading was halted sporadically across all U.S. markets on Monday due to an unexplained issue with the system that distributes price quotes, the latest technology failure to spotlight disruptions in U.S. securities trading.
The mishap occurred in the Options Price Reporting Authority, a computer system that disseminates orders containing price quotes and information about last trades that are executed on the exchanges and distributed to brokers and data vendors.
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A spokesman for exchange operator NYSE Euronext said the problem with OPRA, which is managed by a NYSE unit known as SIAC, involved quote processing, an issue that ground trading in Nasdaq stocks to a halt for three hours in August.
"It was related to some weekend systems work that resulted in quote processing issues," said NYSE spokesman Richard Adamonis.
All trading in options was halted at 1:40 p.m. EDT (1740 GMT), the issue was resolved in 10 minutes and trading started to resume at 2 p.m., Adamonis said.
Trading finally got back to normal by 2:30 p.m. The sporadic halt, coming after a minor issue on Friday, raised questions about the reliability of U.S. security markets.
"We have a very complex market structure in the options market. With 12 exchanges, technology issues are inevitable, particularly when you have interconnected marketplaces," said Andy Nybo, head of derivatives at consultancy TABB Group in New York.
"As trading volumes continue to rise and the level of market data continues to see exponential increases, the industry will be challenged to manage the data loads," Nybo said.
Quote traffic in options has exploded in recent years. The ratio of quotes to execution of a trade rose to 6,493 in July from 4,057 in January, according to the Financial Information Forum, which analyses data from U.S. stock and options markets.
The outage comes after U.S. exchanges officials last week pledged to ramp up efforts to safeguard systems and prevent technology failures after a meeting with Mary Jo White, chair of the U.S. Securities and Exchange Commission.
The SEC meeting was in response to a software bug that caused a three-hour outage in all Nasdaq-listed stocks on August 22 after a securities information processor (SIP) malfunctioned.
On Friday, trading on two of CBOE's securities exchanges was halted for more than half an hour due to unidentified technical problems with OPRA.
"This looks like a mess because nothing is clean. You had some options exchanges going dark at different times during this event," said Eric Hunsader, chief executive of Nanex, a supplier of the OPRA data feed to its subscribers, about Monday's outage.
"We have 12 different options exchanges and each one has to be connected to the others and it seems if one sneezes, they all catch a cold," Hunsader said.
(Reporting by Rodrigo Campos, Herbert Lash, Chuck Mikolajczak and Angela Moon in New York and Doris Frankel in Chicago; editing by Dan Burns, Phil Berlowitz and Nick Zieminski)