Nasdaq breaks: Ed’s Daily Notes for August 23rd   2 comments

Fox Business: Traders React to Nasdaq ‘Flash Freeze’

In case you didn’t notice it yesterday:

Trading of all Nasdaq-listed securities was halted for three hours Thursday afternoon.

Some interesting comments from professional traders:

Todd M. Schoenberger, Managing Partner at LandColt Capital LP:

“We go through this charade every once in a while with the electronic market centers, yet, never hear about ‘issues’ when the humans get involved. I’d rather have a slower trade execution with data integrity than this kind of repeated nonsense.”

Doreen Mogavero, President and CEO of Mogavero, Lee and Co.:

“System failures of any kind are terrible for investor confidence. Unfortunately we are in an environment where regulators have forced exchanges to become more and more reliant on machines and less reliant on human beings.

“The New York Stock Exchange has the right model. Humans beings and technology. The NYSE management has refused to give up the human element on the floor for just this reason. I think we accept that technology will fail occasionally, that has become a fact of life for all of us. That makes human interaction such as we have on the NYSE all that much more important.”

“Regulators have to begin to realize that the pendulum has swung too far in the direction of machines and they need to re evaluate the way they think of the market. They should follow the model that the NYSE has created.”

I think it’s intriguing to hear professional traders on this topic. Is this the sound of despair, knowing your job is becoming more obsolete every second? While it may be true that we are all subject to eventually being replaced by machines, the professional stock trader already has been, and they just don’t seem to realize it. If anything, they should be applauding this event, because it helps buy them a few more hours of relevance.

Personally, when I saw the Nasdaq had stopped yesterday, it was a curiosity, and nothing more. I have grown used to seeing computer programs crash for no apparent reason. I would rather see it stop than see it running incorrectly.

When the Nasdaq resumed, it didn’t act any differently than the Dow or the S&P 500, so I don’t see it as a concern, although the SEC should investigate it to ensure there was nothing illicit in why it stopped, such as…

USAToday: Nasdaq outage resembles hacker attacks

Officials for the moment say they cannot pinpoint anything malicious about the extraordinary outage of the Nasdaq stock exchange earlier today.

But the incident had all the earmarks of the three waves of denial-of-service attacks that have bedeviled U.S. financial institutions, including stock brokerages, since last September.

An Iranian hacking collective — Cyber Fighters of Izz ad-Din al-Qassam — has claimed credit for orchestrating sophisticated attacks that have overwhelmed the expensive security systems U.S. banks have put into place to keep their online banking services up and secure.

“My first thought is that it is a denial-of-service attack, but I’m not sure,” says Gartner banking security analyst Avivah Litan. “It’s a very attractive target. It’s very visible, and that’s what these Iranian state attacks are all about, making a political statement by disrupting a visible website.”

…Nasdaq has been hit by hackers before. In 2011, the FBI disclosed that they discovered suspicious files lurking in a server supporting Nasdaq’s Directors Desk, a cloud-based collaboration service for company board members and senior executives.

Hackers often embed such files to snoop for valuable data, in this case possibly to gain information to make trades using insider knowledge.

Nasdaq at the time issued a statement saying “there is no evidence that any Directors Desk customer information was accessed or acquired by hackers.”

However, it typically takes weeks to months for forensics experts to unravel where expert hackers have roamed in a breached network.

I don’t think it was “hacktivists”, only because nobody has come out claiming credit yet. If you are hacking to make a statement, it would be silly to do so and then not take the opportunity to actually say something.

Then again, there is the “Apple Conspiracy Theory”, as espoused by Tyler Durden at Zero Hedge. I won’t say Durden is wrong, since Apple is the most-owned stock by hedge funds, and is also the largest stock on the Nasdaq by market cap. While Durden does point out some anomalies in Apple’s trading yesterday, and it is possible that a denial-of-service hacking attack was aimed at Apple’s stock, it will be difficult to connect the dots from motive to action on this theory.

Regardless of what actually caused the Nasdaq outage, we probably won’t know the truth until sometime next year…

On a more humorous note, apparently Hitler found out about the Nasdaq outage:

(hat tip to Zero Hedge for this one)

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Posted August 23, 2013 by edmcgon in Humor, Market Analysis, News

2 responses to “Nasdaq breaks: Ed’s Daily Notes for August 23rd

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  1. Ballmer has $16 Billion and decides to step down in a year. Me, I would have stepped down after the first Billion. I enjoyed my career but have found playing is more fun.

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