Nasdaq resolves technical glitch that impacted premarket trading

By Niket Nishant

(Reuters) -Nasdaq, which lists shares of some of the biggest U.S. tech companies on its exchange, said it had resolved a technical glitch that affected trading for more than two hours before Monday's open and that all systems were back up.

The company did not give details about the severity of the problem, its second technical glitch in months, but said on its website it was related to the matching engine - software systems that match buy and sell orders.

"The Nasdaq Stock Market has resolved its earlier matching engine issues and all systems are operating normally. Nasdaq will provide a full postmortem when available," the company said on its website.

The Nasdaq is home to thousands of stocks, including those of iPhone maker Apple, electric vehicle-maker Tesla and semiconductor powerhouse Nvidia.

Technical glitches on exchanges can roil markets, hit traders' confidence and attract scrutiny from the Securities and Exchange Commission.

A person familiar with the matter said the trading impact represented just 0.8% of all exchange traded volume.

Some stocks showed unusually wide spreads - the gap between what buyers bid for a stock and sellers' asking price - with the ask price, in some cases well below the bid price, pointing to poor market liquidity, said Seth Golden, president of investment research firm Finom Group.

"The 'ask' was below the bid, consistently since 5:00 a.m. ET for a majority of stocks ... some spreads had the 'ask' lower by as much as $1/share," Golden said.

A Berlin-based trader attributed a brief dip in Nvidia stock at 6:40am ET to the outage. The trader said it could have been due to incorrect quotes being entered on the Nasdaq.

Nvidia's shares fell from around $902 to around $896 at around 6:40am and then rebounded, Refinitiv data showed.

The chipmaker's shares were recently up around 3.5% at $908.67. The Nasdaq Composite Index was up 1.3%.

OTHERS DECLARE SELF-HELP

The issue also led to self-help declarations against Nasdaq from Cboe and the New York Stock Exchange (NYSE). Both were revoked later.

A "self-help" is a notification issued by a trading exchange when another exchange is dealing with internal problems processing trades and orders are routed through alternate venues.

"Brokers have access to other exchanges. So in that sense the system is set up correctly," said Joe Saluzzi, co-manager of trading at Themis Trading. "There is redundancy in the system. Others will pick up the slack."

The glitch at Nasdaq impacted orders sent using the "RASH FIX" order handling system. FIX, or Financial Information Exchange, is a message protocol that defines an electronic message exchange for communicating securities transactions between two parties.

Outages at major exchanges have been largely contained in recent years. Nasdaq was hit by a system error in December, when stock orders were impacted and over 50 clients at the exchange were affected.

Its rival NYSE also suffered a glitch last year that prevented the opening auctions for a slew of stocks, prompting widespread trading halts, confusion over whether orders were being filled at correct prices and trades in more than 250 securities being busted.

(Reporting by Niket Nishant, Bansari Mayur Kamdar and Sruthi Shankar in Bengaluru and Saqib Ahmed, Laura Matthews and Sinead Carew in New York; Editing by Shailesh Kuber, Ira Iosebashvili and Nick Zieminski)