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Technical glitches or systemic failures?  How much is too much?

On August 22, trading was halted for thousands of stocks due to a technical glitch at Nasdaq. Then again on September 4, Nasdaq suffered another computer glitch that caused a "brief" six-minute "outage" for some of its listed stocks.

With memories of Facebook’s IPO still fresh in both investors’ and issuers’ minds, do these “glitches” indicate serious problems within the system, or are they just hiccups along the way, causing no real harm?

While we’ve seen no reports of any significant impact from these outages for either issuers or traders, the real damage may be to Nasdaq’s credibility in its increasingly competitive battle with the New York Stock Exchange. While Nasdaq has long been the preferred trading ground for the tech sector, Oracle’s switch from Nasdaq to the NYSE in June of this year may be a sign of things to come.

Whether future outages like these are simply minor annoyances that must be lived with in the current speed-of-light trading environment, or cause for concern that something needs to be fixed before a more serious episode occurs, the fact is that instant and reliable communications are more important than ever. Many investment firms have responded by devising new communications systems to ensure that their clients are immediately informed of such instances. Nasdaq also has pledged to improve its communications with customers, using additional channels such as Twitter to get the word out about what’s going on.

How do you feel about these outages? Was your company affected in any way? Have they caused you to lose any confidence in Nasdaq, and if you are a current Nasdaq issuer, are you contemplating a switch?

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