Victims in Vegas April 25, 2013 at 10:18 pm
As Ed Provost took the stage at the Green Valley Ranch Resort & Spa in Las Vegas to explain how a software malfunction had shut the Chicago Board Options Exchange for three-and-a-half hours, he was surrounded by people who were victims of similar disruptions.
On the panel with him were Jeromee Johnson from Bats Global Markets Inc., which canceled its initial public offering last year after failing to get the shares to trade on its own exchange, and Tom Wittman of Nasdaq OMX Group Inc., whose first-quarter profit was cut in half because of costs related to its mishandling of Facebook Inc.’s IPO in May. Six people on the attendee list were from Knight Capital Group Inc., which almost went bankrupt after a software error flooded the equity market with bad trades.
As the article’s author Nikolaj Gammeltoft says, today’s CBOE hickup underscores how common software-related market disrupting events have become. Yesterday’s events were not, so far as I know, fatal to anyone, merely inconveniencing. But should an exchange like CBOE has a monopoly on trading a benchmark contract as important S&P500 index options if they can go down for three hours unexpectedly?