Why Nasdaq, NYSE will back each other up: Greifeld
Setting competition aside, an arrangement between the nation's two largest stock exchanges would provide a backstop during trading disruptions, Nasdaq CEO Robert Greifeld told CNBC on Thursday.
The New York Stock Exchange and Nasdaq OMX Group said Wednesday they are working on a framework that will allow them to back up each other's closing auctions if they are interrupted by a technical glitch.
Earlier this month, the NYSE was forced to suspend floor trading for several hours in the biggest outage to hit a U.S. financial market in nearly two years.
"We compete with them quite vigorously, but there's times when competition is not the right path and we need to cooperate, and this was it," Greifeld said in a "Squawk Box" interview. "For the betterment of the industry, the financial ecosystem, we wanted to make sure we bring additional resiliency to the process."
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Nearly all U.S. trading is done electronically, and the NYSE outage again raised questions about the robustness of the technology at exchanges after a series of major glitches in recent years.
The NYSE attributed the outage to "unusual system behavior" resulting from a problem connected to a software update.
"Clearly, software is a complicated environment and it can run into issues," Greifeld said. "I think [the NYSE leaders] in particular have certain issues left over from their legacy administrations that they're working through."
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Two days after the incident, Greifeld told CNBC that stock exchange systems had focused primarily on functionality, user-friendliness and speed, but the next generation must tackle security and resiliency.
The Nasdaq suffered its own hourslong outage in 2013 due to an internal software bug and connection problems with its system and NYSE's Arca.
Both exchanges will file proposals with the Securities and Exchange Commission, laying out a clear plan for the backup arrangement.
—Reuters contributed to this story.