NYSE Says Experienced Trading Delays

By Jonathan Keehner, Reuters  |  Posted 02-28-2007
NEW YORK (Reuters) - The New York Stock Exchange's touted trading floor automation was tested by its first big selloff on Tuesday, and didn't pass with flying colors.

The Big Board was not the only financial company to see its systems taxed by tumbling equity markets and soaring volumes.

But the admission of a glitch may be a sign that its hybrid system, which has coincided with the loss of hundreds of flesh-and-blood floor trading jobs, still needs to work out some kinks.

"Toward the end of trading today, we experienced intermittent delays and we are assessing the situation," said NYSE Group spokesman Eric Ryan.

The delays occurred toward the end of Tuesday's big stock sell-off, which resulted in heavy volume on the NYSE where about 2.41 billion shares changed hands -- well above last year's estimated daily average of 1.84 billion.

The glitch could be an indication that NYSE's hybrid market, which integrates floor-based trading with automated capabilities, was unable to handle such large volume, analysts said. Last month, the NYSE requested a delay in upcoming regulatory deadlines, citing delays in rolling out the hybrid market.

TRADES SNAGGED ON MANY VENUES

While the S&P 500 experienced its biggest one-day drop in almost four years, orders were snagged on venues ranging from the Big Board, which is the largest U.S. stock exchange, to discount brokers catering to mom-and-pop retail investors.

The Web sites of several full service and online brokerages were significantly delayed, said Matt Poepsel of Lexington, MA-based consultant Gomez, Inc.

Response times for online brokers at Banc of America Investment Services, Inc., a unit of Bank of America , The Vanguard Group, and Fidelity were all at least four times slower for the final trading hour on Tuesday than during that period the day prior, according to Gomez.

A Fidelity spokesman was not immediately available and Bank of America declined to comment, but a Vanguard spokeswoman confirmed that trades were "slightly slower than normal."

A technical glitch also hit the system that calculates the Dow Jones industrial average on Tuesday, but it did not affect stock prices, a spokeswoman for Dow Jones Indexes said.

With an hour left to trade, the Dow Jones industrial average fell more than 500 points as it abruptly added about 200 points to its slide in late afternoon trade.

The combination of glitches and delays may have further complicated a major sell-off in U.S. equity markets on Tuesday, as a plunge in China's equity market fanned worries that stock valuations there are too high and some data indicated U.S. economic growth may slow.

(Additional reporting by Ellis Mnyandu and Jonathan Stempel)