Business

Stock exchanges eye aging tech after outages

Regulators and exchange operators will focus on the nation’s aging stock quote system when they meet on Thursday to address system outages that have shaken confidence in the markets.

Nasdaq OMX, NYSE Euronext and other exchange operators are set to meet with Securities and Exchange chief Mary Jo White at 9 a.m. to hash out a plan for dealing with a string of glitches and trading meltdowns.

The meeting was sparked by Nasdaq’s epic three-hour outage on Aug. 22, when the system that consolidates the pricing data of publicly traded companies at other exchanges experienced a major glitch.

Backing up and upgrading the system, known as the securities information processor, or SIP, will be a main topic of discussion, sources said. The SIP system was engineered a decade ago and exchange bosses likely will float upgrading it, among other ideas.

Sources said one way is to standardize the SIP systems across more than a dozen exchanges so that they share the same capacity limits — how much information per second they can process — and better communicate with each other.

Another idea is creating parallel SIP servers that would back up any one of the exchanges in case of a glitch at one or more.

Kill switches to eliminate erroneous trades before they taint other systems also will be a topic of discussion, sources said.

Many of the ideas have been floated before during the reign of White’s predecessor, Mary Shapiro. However, White is expected to push for implementation more aggressively.

Exchanges operators landed on regulators’ radar after the chilling May 6, 2010, “Flash Crash” that saw the markets plunge more than a 1,000 points in a matter of minutes only to recover just as quickly.