Ken Poirot's Blog - Posts Tagged "nyse-trading-halt"
NYSE Computer Glitch No Surpise...
NYSE Computer Glitch and Trading Halt
As many of you saw in the news this week, on Wednesday the New York Stock Exchange (NYSE) suffered a "computer glitch" that caused a halt in trading for about four hours.
After spending almost twenty years as a financial professional working for some of the top NYSE-listed financial services companies (American Express, Charles Schwab, Merrill Lynch, and JPMorgan Chase, etc...), I have to tell you: I am not surprised by a NYSE computer glitch.
My biggest surprise...that NYSE computer glitches and subsequent trading halts do not happen more often!
Charles Schwab and the Dotcom Tech Bubble
I was working as an Investment Representative for Charles Schwab during the dotcom tech bubble era of "irrational exuberance" in the mid-to-late 90's.
The media had a field day with Charles Schwab; they seemingly enjoyed publicly flogging them in the news whenever they discovered Charles Schwab suffered computer glitches or systems problems that occurred those years.
Due to the large volume of stock trading during that time, their systems often reached a critical breaking point which their computers just could not handle.
No matter how much capacity and how many servers Schwab added, it never seemed to keep pace with the ever increasing appetite for stock trading brought about by the "irrational exuberance" of the tech bubble prior to its implosion.
What I will tell you is this: actually working on their computer systems with clients on a daily basis, opening accounts, and placing trades...the media only caught wind of about one-tenth of the computer glitches or system outages.
There were days we were placing trades for clients in their accounts when we could not even check account balances. On those days, we were completely blind to what money or stocks were in (or not in) client accounts!
Charles Schwab's back-up computer systems gave priority to the trading platform over all other computer systems. This sometimes meant cutting off access to client account information in order to shift that computer capacity to trading.
The day 1.2 billion shares traded on the NYSE for the first time (October 27th, 1997) and the market was crashing due to the economic woes in Asia, all of our computers in the branches went down completely!
Clients who wanted to trade online found they could not get access to their accounts on their home computers. They piled into the Charles Schwab branches in droves to place their trades.
All the branch computers went offline!
Investment Representatives, like me, were relegated to taking written, paper-ticket trades from clients, with the idea we would have to physically phone the trades into our main office and/or reconcile the trades at a later time (time/date stamped so the trades would be executed at the proper time and price with Charles Schwab taking the risk for any losses due to the inability to actually place the trades at that given moment).
My Visit to the New York Stock Exchange
In June 2006, while I was the Sales Manager and Senior Vice President over Frost Bank's (a NYSE-listed company) brokerage department, I attended a conference hosted at the New York Stock Exchange.
For a financial professional, standing on the floor of the New York Stock Exchange is equivalent to a deeply religious experience. It was awe-inspiring to be at the heart of the US financial markets, in the financial capital of the world, observing traders in the heat of battle during market hours.
This was the post-9 11 era of tightened and heightened security, so getting into the New York Stock Exchange itself, the Crown Jewel of the financial markets, was strictly by invitation only.
Due to the constant thought of terror threats and those who might attempt to strike a symbolic victory by obliterating the New York Stock Exchange building (and thereby also unleash turmoil in the USA and world financial markets), you can imagine the NYSE became a very security-sensitive installation after 9 11.
Security getting into the NYSE
For these reasons, post-9 11 the New York Stock Exchange stopped allowing public access and ceased all public tours in order to become an impenetrable, tightly-secured building.
In other words, to receive an invitation to tour the NYSE privately during the day, attend a private party in the evening on the floor of the NYSE, and experience a press conference in the Federal Reserve Board meeting room in the NYSE the next day, was truly a "special invitation" event.
To gain entry to the NYSE you have to be on their daily access list. I recall waiting in line as armed guards checked the photo ID of everyone entering the building at a designated non-employee entrance.
All photo ID's were cross-referenced with a printed list, and upon entering the building, we were all escorted from room-to-room by our specially-assigned NYSE employee.
There was no wandering around the NYSE by yourself; you came with a group, you were escorted from place-to-place with your group, you could not leave your group while in the building, and you left with your group.
NYSE Security Shockingly Lax After-Hours
In the evening, we had a private party on the floor of the New York Stock Exchange. The guest speaker was Dick Vermeil (ex-NFL coach whose tenure with the Philadelphia Eagles was the premise for the movie, "Invincible," with Mark Wahlberg).
Per the sponsor for the conference, after Dick Vermeil's speech he autographed footballs and posed for photos with the attendees. Below is my photo with Dick Vermeil on the floor of the NYSE:
https://www.goodreads.com/photo/autho...
There was an open bar and some people were wandering around the floor of the NYSE with drinks in one hand while throwing or catching footballs in the other. My first thought was, "This is crazy!"
My next thought was, "If this is business as usual, it appears reckless. After all, these trading floor computers are not here for decoration. What impact would be felt by financial markets in the USA and around the world if these NYSE computers were inadvertently damaged?"
I was being extra cautious, but any one of us could have accidentally spilled drinks all over the many computer terminals on the floor of the NYSE. We were right next to those computers and walked among them unobstructed.
I would not want to think anyone would maliciously pour drinks all over NYSE computers to intentionally upset the financial markets, but it was certainly possible that evening.
For me, the casual observer, the supervision and security was shockingly lax at this particular private party in such an ultra-sensitive location as the NYSE trading floor.
Computer Issues Happen: System Connectivity, Overcapacity, Outages, Accidents
So my biggest surprise with respect to Wednesday's "computer glitch" at the NYSE is not that it happened...I am surprised it does not happen more often!
As I wrote earlier, even Charles Schwab (known as one of the best-run and most technologically-advanced brokerage houses and trading platforms at the time) had computer issues on a very regular basis in the mid-to-late 1990's.
System connectivity, overcapacity, and outages occur. No planning in the world can prevent computer glitches from creeping in from time-to-time.
As we also know, accidents do happen.
I cannot say what the situation is today, in 2015, with regard to NYSE security, and especially my observation of appallingly lax after-hours supervision on the NYSE floor (allowing drinks and footballs tossed around in the midst of NYSE computers).
What I can say is, from what I observed at the NYSE after-hours during that one private party experience, I am truly surprised there are not more NYSE "computer glitches" and subsequent trading halts.
Warmly,
Ken Poirot
Mentor Me: GA=T+E—A Formula to Fulfill Your Greatest Achievement
Ken Poirot
As many of you saw in the news this week, on Wednesday the New York Stock Exchange (NYSE) suffered a "computer glitch" that caused a halt in trading for about four hours.
After spending almost twenty years as a financial professional working for some of the top NYSE-listed financial services companies (American Express, Charles Schwab, Merrill Lynch, and JPMorgan Chase, etc...), I have to tell you: I am not surprised by a NYSE computer glitch.
My biggest surprise...that NYSE computer glitches and subsequent trading halts do not happen more often!
Charles Schwab and the Dotcom Tech Bubble
I was working as an Investment Representative for Charles Schwab during the dotcom tech bubble era of "irrational exuberance" in the mid-to-late 90's.
The media had a field day with Charles Schwab; they seemingly enjoyed publicly flogging them in the news whenever they discovered Charles Schwab suffered computer glitches or systems problems that occurred those years.
Due to the large volume of stock trading during that time, their systems often reached a critical breaking point which their computers just could not handle.
No matter how much capacity and how many servers Schwab added, it never seemed to keep pace with the ever increasing appetite for stock trading brought about by the "irrational exuberance" of the tech bubble prior to its implosion.
What I will tell you is this: actually working on their computer systems with clients on a daily basis, opening accounts, and placing trades...the media only caught wind of about one-tenth of the computer glitches or system outages.
There were days we were placing trades for clients in their accounts when we could not even check account balances. On those days, we were completely blind to what money or stocks were in (or not in) client accounts!
Charles Schwab's back-up computer systems gave priority to the trading platform over all other computer systems. This sometimes meant cutting off access to client account information in order to shift that computer capacity to trading.
The day 1.2 billion shares traded on the NYSE for the first time (October 27th, 1997) and the market was crashing due to the economic woes in Asia, all of our computers in the branches went down completely!
Clients who wanted to trade online found they could not get access to their accounts on their home computers. They piled into the Charles Schwab branches in droves to place their trades.
All the branch computers went offline!
Investment Representatives, like me, were relegated to taking written, paper-ticket trades from clients, with the idea we would have to physically phone the trades into our main office and/or reconcile the trades at a later time (time/date stamped so the trades would be executed at the proper time and price with Charles Schwab taking the risk for any losses due to the inability to actually place the trades at that given moment).
My Visit to the New York Stock Exchange
In June 2006, while I was the Sales Manager and Senior Vice President over Frost Bank's (a NYSE-listed company) brokerage department, I attended a conference hosted at the New York Stock Exchange.
For a financial professional, standing on the floor of the New York Stock Exchange is equivalent to a deeply religious experience. It was awe-inspiring to be at the heart of the US financial markets, in the financial capital of the world, observing traders in the heat of battle during market hours.
This was the post-9 11 era of tightened and heightened security, so getting into the New York Stock Exchange itself, the Crown Jewel of the financial markets, was strictly by invitation only.
Due to the constant thought of terror threats and those who might attempt to strike a symbolic victory by obliterating the New York Stock Exchange building (and thereby also unleash turmoil in the USA and world financial markets), you can imagine the NYSE became a very security-sensitive installation after 9 11.
Security getting into the NYSE
For these reasons, post-9 11 the New York Stock Exchange stopped allowing public access and ceased all public tours in order to become an impenetrable, tightly-secured building.
In other words, to receive an invitation to tour the NYSE privately during the day, attend a private party in the evening on the floor of the NYSE, and experience a press conference in the Federal Reserve Board meeting room in the NYSE the next day, was truly a "special invitation" event.
To gain entry to the NYSE you have to be on their daily access list. I recall waiting in line as armed guards checked the photo ID of everyone entering the building at a designated non-employee entrance.
All photo ID's were cross-referenced with a printed list, and upon entering the building, we were all escorted from room-to-room by our specially-assigned NYSE employee.
There was no wandering around the NYSE by yourself; you came with a group, you were escorted from place-to-place with your group, you could not leave your group while in the building, and you left with your group.
NYSE Security Shockingly Lax After-Hours
In the evening, we had a private party on the floor of the New York Stock Exchange. The guest speaker was Dick Vermeil (ex-NFL coach whose tenure with the Philadelphia Eagles was the premise for the movie, "Invincible," with Mark Wahlberg).
Per the sponsor for the conference, after Dick Vermeil's speech he autographed footballs and posed for photos with the attendees. Below is my photo with Dick Vermeil on the floor of the NYSE:
https://www.goodreads.com/photo/autho...
There was an open bar and some people were wandering around the floor of the NYSE with drinks in one hand while throwing or catching footballs in the other. My first thought was, "This is crazy!"
My next thought was, "If this is business as usual, it appears reckless. After all, these trading floor computers are not here for decoration. What impact would be felt by financial markets in the USA and around the world if these NYSE computers were inadvertently damaged?"
I was being extra cautious, but any one of us could have accidentally spilled drinks all over the many computer terminals on the floor of the NYSE. We were right next to those computers and walked among them unobstructed.
I would not want to think anyone would maliciously pour drinks all over NYSE computers to intentionally upset the financial markets, but it was certainly possible that evening.
For me, the casual observer, the supervision and security was shockingly lax at this particular private party in such an ultra-sensitive location as the NYSE trading floor.
Computer Issues Happen: System Connectivity, Overcapacity, Outages, Accidents
So my biggest surprise with respect to Wednesday's "computer glitch" at the NYSE is not that it happened...I am surprised it does not happen more often!
As I wrote earlier, even Charles Schwab (known as one of the best-run and most technologically-advanced brokerage houses and trading platforms at the time) had computer issues on a very regular basis in the mid-to-late 1990's.
System connectivity, overcapacity, and outages occur. No planning in the world can prevent computer glitches from creeping in from time-to-time.
As we also know, accidents do happen.
I cannot say what the situation is today, in 2015, with regard to NYSE security, and especially my observation of appallingly lax after-hours supervision on the NYSE floor (allowing drinks and footballs tossed around in the midst of NYSE computers).
What I can say is, from what I observed at the NYSE after-hours during that one private party experience, I am truly surprised there are not more NYSE "computer glitches" and subsequent trading halts.
Warmly,
Ken Poirot
Mentor Me: GA=T+E—A Formula to Fulfill Your Greatest Achievement
Ken Poirot
