The Nasdaq market said it removed the stock quotes of three large electronic communications networks from its computer system for about three hours Wednesday because of problems with new Nasdaq software.
Nasdaq's action meant investors might not have had access to the best prices to buy or sell. Investors' orders to buy or sell that were entered directly into those electronic networks could not be disseminated to other brokers, and other brokers who wanted to trade with those customers could not. "Nasdaq has had a catastrophic system failure today," said Matt Andresen, president of Island ECN Inc., one of the networks whose quotes were pulled. ''They've chosen to voluntarily fragment their own market.''
Electronic message traffic on Nasdaq's SelectNet system was unusually slow after the market opened at 9:30 a.m. New York time because of the new software, Mr. Andresen said. SelectNet lets brokers send orders to each other and receive confirmation that orders have been executed.
To ease the problem, Nasdaq pulled the quotes of Island and two competitors, Instinet and Brass Utility, said Scott Peterson, a Nasdaq spokesman.
The problem was caused by new software being installed to let Nasdaq extend the hours its trade reporting and quotation system is open each day, Mr. Peterson said. He couldn't immediately say why Nasdaq had removed the quotes of Island, Instinet, and Brass Utility and not those of other networks or brokers. -- Bloomberg News