Nasdaq’s CEO cops to a failure to communicate
CEO Bob Greifeld (above) of reputation-challenged Nasdaq is taking steps to acknowledge its oversights in response to this month’s trading freeze. (Bloomberg News)
Nasdaq CEO Bob Greifeld, criticized for not sufficiently communicating the exchange’s problems during a three-hour shut down last week, admitted yesterday to those faults.
The exchange, in a letter to its nearly 3,000 clients and in a report on the trading shut down, said the episode had taught it a valuable lesson.
Greifeld’s exchange, in the report, said it is “undertaking a comprehensive review of the policies and procedures for communicating with customers, market participants and the broader public.”
The world’s No. 2 exchange’s admission of communication issues comes after The Post reported that regulators weren’t thrilled with how quickly Nasdaq informed them of problems.
Nasdaq’s recent acknowledgment is in contrast to Greifeld’s earlier comments about the exchange’s communications to media outlets less than 24 hours after the meltdown.
“Our communication yesterday, was something we were very satisfied with…” Greifeld told Bloomberg TV on Aug. 23.
Offering its most detailed account of the freeze yesterday, Nasdaq also took its share of the blame.
“A number of issues were clearly within the control of Nasdaq OMX,” Nasdaq wrote.
Nasdaq officials are considering using platforms like Twitter and Facebook to keep the public apprised of exchange’s status when problems arise, people familiar said.
The exchange emphasized its commitment to enhancing its trading platform.
However, Greifeld’s mea culpa moment didn’t stop the exchange operator — home to more than 2,700 public companies — from also laying blame upon its fiercest rival, the New York Stock Exchange.
Greifeld’s exchange said its own backup systems failed to kick in effectively after NYSE Arca’s system flooded its exchange switchboard that disseminates stock information, known as the Securities Information Processor, or SIP.
Nasdaq reports that NYSE’s system issued bursts of info topping out at more than 26,000 pieces per second — 26 times the average volume for the NYSE during a slow August trading day.
The information bursts triggered a bug in Nasdaq’s system which was exacerbated by the fact its fail-safe failed to launch.
Although software problems are not uncommon, Nasdaq’s communications about its problems and its tense relationship with rivals may only add to its woes, critics told The Post.
“These exchanges are like professional gladiators and when there’s a problem they don’t want to take all the blame,” said James Angel, markets expert and professor at Georgetown University.
The Securities and Exchange Commission, which has been miffed about how well exchanges work together as well as the speed of Nasdaq’s communications, is hosting a meeting with the more than a dozen exchange heads on Sept. 12.
Greifeld downplayed the tense relationship with the NYSE.
“Us and NYSE are working together in conjunction with the [SEC] to fully understand what transpired and to ensure that the infrastructure of the markets are improving,” Greifeld told The Post.