[Infowarrior] - Nasdaq index quote outage leaves traders scrambling

[Richard Forno]

Nasdaq index quote outage leaves traders scrambling

http://uk.finance.yahoo.com/news/Nasdaq-index-quote-outage-reuters_molt-3925888678.html?x=0

NEW YORK (Xetra: A0DKRK - news) (Reuters) - Nasdaq (NASDAQ: news) is investigating a problem that caused quotations for its main indexes to be unavailable for about an hour, leaving investors scrambling for key decision-making data at the opening on Friday.

Nasdaq OMX Group shares slid 3 percent to $24.46 (£15.44). The exchange operator has not yet said what caused the problem, which affected index quotes from 9:30 a.m. until about 10:20 a.m..

Traders were frustrated by the problems with Nasdaq, one of the U.S. stock market's two major exchanges. During the outage, traders could not see quotes for the Nasdaq composite (NASDAQ: news) and the Nasdaq 100 index .

The Nasdaq said it would cancel all options trades in contracts related to the Nasdaq 100 and CBOE mini index between 9:30 a.m. and 10:25 a.m.

"From an investor confidence standpoint, it's not a positive," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

"It just makes it difficult to have a true gauge on where the market is when you can't see where one of the main indices is actually pricing," he said. "It impacts people's decision-making involving ETF (exchange-traded funds) trading, certainly."

About a half hour after the main indexes resumed, several sector indexes finally displayed quotes, including the much-followed semiconductor index .

"It could have thrown some monkey wrenches to the arbitrage guys ... if you're relying on the indexes" for that, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham (CHTM.PK - news) , New Jersey.

"This is an interconnected market. everything links together, now more than ever, with all of the super computers out there. So if you take one chain off the link, it could cause problems," he said.

At Nasdaq's Times Square location in New York, the towering electronic screens gave no indication of the exchange's indexes some 45 minutes after the opening bell. Many of the screens instead showed quotes for the Dow Jones (news) industrial average .

Jamie Selway, market structure expert and managing director of Investment Technology Group's New York office, said occurrences such as the Nasdaq outage are rare.

"You hear about lags in calculations, including a few problems in the past decade with the Dow (NYSE: DPD - news) . In times of stress you hear about it, but I suspect this is instead due to some operational error."

Individual share price quotes were not affected, and trading volume in the first half-hour was the highest this week.

Nasdaq OMX (NASDAQ: NDAQ - news) said the data on World Currency Options, ETFs, the KBW (NYSE: KBW - news) bank index , the Russell 2000 , and other indexes were not impacted by the outage.

(Additional reporting by Jonathan Spicer; Editing by Padraic Cassidy)