By Brian Boyko
Although the stock market seems to have started recovering, trading in the New York Stock Exchange took a heavy tumble yesterday.
There are two main theories about the market plunge. The first was a $100B drop in the value of the Shanghai stock market.
The other is computer related. According to the Seattle Times, Dow Jones & Co.’s computers weren’t up to the task of handling the huge volumes of trades at the NYSE – a spike of 4.5 billion trades, or twice the usual average. Switching over to a backup computer caused a massive “catch-up” in the Dow Jones industrial average – which recorded an instant plunge of 200 points, which couldn’t have had a positive effect on investors, who reported that computer systems were slow to respond.
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“Some of the books froze up,” [Todd Leone] said, referring to the systems with which traders place their orders. “You couldn’t really trade. You couldn’t really make sales.” He said orders appeared to become backed up. “Once they unfroze, the Dow fell.”
By the end of the day, it was the worst single-session decline since the day the stock market reopened for trading after September 11, 2001.
In most organizations, a short spike in traffic that causes a few seconds freeze may warrant a call to the help desk and maybe causes a lost sale. The NYSE is not most organizations, and a sharp spike in traffic resulted in a 3.3% loss of market value.
According to Bloomberg.com:
“The system should be able to handle the capacity when you have high-volume days,” said Thomas Garcia, head of trading at Thornburg Investment Management, which oversees about $34 billion in Santa Fe, New Mexico. “If I was making decisions based off of bad data, then yeah, I have a huge problem with that.”
…
“The extraordinary heavy trading volume caused a delay in our Dow Jones Industrial Average data,” said Sybille Reitz, a spokeswoman at New York-based Dow Jones, publisher of the Wall Street Journal and Barron’s. “As we identified the problem we switched over to a backup system and the result was a rapid catch up in the public value for the Dow.”
And while everyone’s focusing on the Dow index, it’s important to remember that slow trades mean lost business for the brokers who execute these trades as well. All in all, yesterday was a network performance problem of a sort that we usually don’t talk about – but a network performance problem nonetheless.
Brian Boyko is editor of Network Performance Daily
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