Sen. Warner asks SEC for details of Thursday’s NASDAQ outage

U.S. Sen. Mark Warner (D-Va.), a member of the Senate’s Banking Committee, sent a letter today to Mary Jo White, chairman of the U.S. Securities and Exchange Commission asking White to look into Thursday afternoon’s three-hour breakdown in trading on the NASDAQ exchange.

The text of Sen. Warner’s letter is below.

 

August 23, 2013

The Honorable Mary Jo White

Chair, U.S. Securities & Exchange Commission

100 F Street, NE

Washington, D.C. 20549

 

Dear Chair White:

I am writing today to request that you undertake a thorough investigation of the glitch at the NASDAQ exchange that shut down trading and disrupted markets for three hours on Thursday, August 22, 2013, and report back to Congress on what steps can be taken to ensure such disruptions can be avoided in the future.

While not identical to other market glitches we have seen in the past few years that were affiliated with high-frequency trading and algorithmic malfunctions, recent disruptions from NASDAQ—an exchange that is marketed as the electronic, technology-focused platform—are no less troubling.  Coupled with the Facebook initial public offering in 2012, this is the second major recent disruption to markets caused by a glitch at the NASDAQ.

Such glitches have serious consequences.  A stock exchange plays an important role in America’s economy.  The exchanges provide our entrepreneurs access to forums to raise capital and transfer risk.  When an exchange fails to function properly, as was apparent on August 22, this type of event impedes our economy by eroding consumer confidence.  In turn, retail investors are discouraged from participating in capital markets thereby worsening liquidity and depriving entrepreneurs of capital needed to innovate and grow fledgling companies.

Securities markets need prudent regulation to ensure their integrity.  A timely report on this market malfunction, proposals on how such disruptions can be avoided in the future, and strong remedial measures as appropriate will go a long way to restore confidence to the marketplace.

Thank you for your timely attention to this matter.  As always, I appreciate your service to our country.