Why it took so long for the NYSE to reopen

NYSE canceling all open orders
NYSE canceling all open orders   

Wednesday's stock market computer shutdown at the New York Stock Exchange was exaggerated in part by a very human problem.

As the market's complicated computer infrastructure went into meltdown, the exchange announced it would cancel any affected trades.

One problem: All of those electronic trades had to be nullified manually.

"At the NYSE this is a manual process," said Sal Arnuk, a principal at Themis Trading. "Is the NYSE technologically the most (robust) exchange in the world? No. The fact of the matter is the different exchange operators have diverse standards, different architecture. Some of them are more legacy than others. This is to be expected from time to time."

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In reality, Arnuk, who along with Themis partner Joe Saluzzi has been a frequent critic of market structure, said this is one instance where fragmentation, or the far-flung nature of stock market trading venues, worked to its advantage.

Stocks are trading elsewhere, with the multiple other exchanges such as the Nasdaq, BATS, IEX, Archipelago and others in full vigor.

"The market is handling it," Arnuk said. "It's a bigger deal in the media than with the traders that are trading in these stocks today."

The quickest comparison for the NYSE glitch was the three-hour shutdown at the Nasdaq, the midtown New York exchange that trades mostly technology issues. The event, nicknamed the "flash freeze" happened on Aug. 22, 2013 and brought howls from some traders about how technology was creating its own problems in the markets.

In that case, the problem was traced to a SIP, or a Securities Information Processor, a device that provides price feeds to traders.

Though the issue caused a degree of market mayhem similar to Wednesday's NYSE event, the actual damage was minimal. Both events occurred on days when trading volume was low and thus helped mitigate problems.

NYSE floor trading accounts for about 25 percent for total NYSE composite volume.