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  • The NASDAQ and the NYSE to Work Together
Technology Articles > Software > Servers > The NASDAQ and the NYSE to Work Together

Where there's technology, there are bound to be problems. That's just the way the cookie crumbles, but when stock exchanges are ground to a halt thanks to problems with tech, the repercussions can be huge (remember the Facebook fiasco?). That's why NASDAQ and the NYSE are currently working to fix possible tech outages.

Working Together to Make It All Work

At present (and according to the Wall Street Journal), the Securities and Exchange Commission is working with execs at Nasdaq and the NYSE to put a stop to exchange outages. The new plan would involve one exchange backing up the other in case of a technological glitch. If, for example, the Nasdaq had a power outage, the NYSE would offer support in the form of a backup stock stream. The result would be exchanges that appear to be running smoothly to traders, even if (and when) one exchange goes down.

The SEC has openly stated that both exchanges are too vulnerable to outside attacks and glitches, and that this is an obvious problem. The solution might be for each exchange to work together in order to prevent the complete takeover or shutdown of one exchange. Not only did the SEC express concern, the SEC regulator also handed each exchange board a demand to fix the tech issue within 60-days.

A Tight Deadline

The NYSE and the Nasdaq have exactly 60-days to come up with a good plan that would prevent both exchanges from future hacks and glitches. It seems as though tech problems have been on the rise for both exchanges over the past few months. Not only did the Facebook fiasco cause a lot of problems, but the Nasdaq stopped operating for a few hours on August 22nd due to a software issue. Recently (though this incident received less press), the NYSE experienced a ten minute halt thanks to a bad software update.

Clearly, something needs to be done. Is setting up a backup system with each exchange the solution to the problem? It could go either way, but the SEC isn't messing around this time. It's clear that the SEC wants each exchange to fix possible tech glitches, no matter what. At present, both exchanges heavily rely on technology to operate.

Not So Fast

While it makes sense that one exchange could back up the other, this might not be a quick fix. Presently, the NYSE and the Nasdaq use different technology to communicate with brokers and broker trades. Providing backup for one with the other would require a different type of language that could be understood by both exchanges. This would take some time.

While the concept of a backup plan is needed, it will be interesting to see whether or not the two exchanges work with each other on this 60-day deadline. In some instances, it makes a good deal of sense. In others, it seems like a lot of hassle, coding work, and trouble just to provide a backup plan. Either way, both the Nasdaq and the NYSE have just 60-days to put it all together.