stock market: NASDAQ NORDIC STOCK MARKET BLACKOUT HURTS CONFIDENCE

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Nasdaq's Nordic stock market blackout hurts confidence
Bloomberg News
Published: June 3, 2008
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STOCKHOLM: Nasdaq OMX Group was able to resume trading in Nordic financial markets Tuesday after fixing a software error that locked out clients and caused the exchanges' longest blackout in a decade, an incident that users said could hurt its business.

Trading in Stockholm, Copenhagen, Oslo and Helsinki started after Nasdaq OMX delayed the market opening twice Tuesday and suffered software errors Monday.

NOTE: NASDAQ OMX GROUP IS A WELL RESPECTED GROUP IN THE STOCK MARKET INDUSTRY.

The shutdown of more than five hours Tuesday was the longest since 1999, the exchange said. Trading hours will not be prolonged to make up for the delay.

"This puts the focus on OMX, and not in a good way. It's a problem of confidence," said Ronny Jacobsson, the head of equity trading at Swedbank in Stockholm. "Technological changes have clearly not been prepared adequately."

The halt in trading hit Nasdaq three months after it paid 32 billion kronor, or $5.34 billion, to buy OMX in a joint transaction with Borse Dubai, providing a foothold for the U.S. market operator in Europe. Competition has intensified with the emergence of companies including Chi-X Europe, a pan-European electronic system that allows clients to trade major Swedish stocks like Ericsson or Volvo.
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Tests in the last few weeks before a system upgrade did not indicate any problems, said Jonas Rodny, a spokesman for OMX. The goal of the upgrade was to improve the speed of the system and introduce more functionality, he said. The integration of the Nasdaq and OMX systems was not a reason for the malfunction, he said.

About 75 percent of the members of the exchanges have to be operational for the market to open, Rodny said, a requirement that was not met Tuesday. The last time OMX had a technical problem that required it to close the market was in June 2006, when the exchange was suspended for 38 minutes, he said.

"It is a disaster that the stock market doesn't work better than this," said Claes Hemberg, a spokesman for the Swedish online brokerage Avanza.

OMX runs the exchanges in Stockholm, Helsinki, Reykjavik and Copenhagen in addition to exchanges in the Baltic states. OMX also holds a 5.8 percent stake in the Norwegian exchange, according to its Web site. The Dow Jones Nordic 30 index, which includes companies like Ericsson, Volvo and Nokia, trades more than a billion shares on average each week.

Nasdaq has sought access to Europe to compete with its bigger rival, NYSE Euronext, which operates stock and derivatives exchanges on both sides of the Atlantic. Deutsche Börse of Germany also became a trans-Atlantic market after its acquisition of International Securities Exchange Holdings, a large U.S. options exchange.

"Its extremely unfortunate," said Anders Berg, the head of equity research at Evli Bank in Stockholm. "There are other institutions in Europe trying to build pools of liquidity, and this plays into their hands."
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