Trader Talk

What's next for NYSE after Wednesday's halt

Pisani's market open: Smooth open at NYSE

It was a smooth open for the New York Stock Exchange on Thursday, a day after a nearly four-hour outage of the main trading floor.

Late last night, the NYSE issued a statement saying the cause was a "configuration issue," which is a fancy way of saying a server or piece of hardware wasn't set up correctly.

The likely cause was a routine software upgrade. These require changes in the software code, and sometimes those changes create problems with the messaging that goes back and forth between the NYSE and their clients.

There were "connectivity issues" at the open that hinted there might be a problem, but they appeared to have been quickly resolved. It's possible the shutdown that occurred at 11:32 a.m. EDT happened because the fix to the earlier problem caused a cascading series of new problems.

The question I have for the NYSE is, did they follow best practices testing the upgrade in a virtual environment? Who exactly managed and performed the upgrade?

Read More Cramer on NYSE halt—We were warned this was coming

What's next? First, there's a bit of damage control the NYSE needs to do. It needs to assure clients that the issues were a one-off event and not a major systemic problem.

Second, the SEC will look into this and determine if the NYSE was in compliance with recent regulations that require all the exchanges to regularly update and test their systems. There will be a post-mortem, but don't expect to hear anything for a while, possibly a year or more.

What have we learned? We learned that there is a need for a strong safety net in the event a technology outage occurs, and by and large the safety net was fragmentation. The NYSE's Archipelago exchange, the electronic part of the NYSE, operated as normal, as did trading on other exchanges, including NYSE-listed stocks.

What we did not learn is that the floor is "irrelevant." I've been doing "Is the NYSE floor dead?" stories for 15 years, and got over it when Dick Grasso left in December 2003. The floor is not the force it once was, but a lot of things aren't. The floor still matters, particularly at the open and close and for IPOs.