Tom Farley, NYSE Group President, spoke with Bloomberg Television’s Stephanie Ruhle about the glitches that brought the NYSE trading to a halt for three and half hours.
On what led to the shutdown, Farley said: “We were getting intermittent messages of customers not seeing the exact behavior that they would otherwise expect with respect to messages. I didn’t feel like we had the level of trust in our systems that is required and I made the decision, working with regulatory team and counsel’s office, let’s suspend trading.”
On what caused the problem, Farley said: “There was a configuration problem in our system. It likely had to do with an upgrade, but that is premature, and it’s something that will come about as part of a full analysis of the situation.”
On his decision-making process, Farley said: “My first concern was do no harm during the day. Those stocks continue to trade elsewhere. Get the problem fixed. And get it back up and running for the close. We chose the least disruptive option for customers.”
STEPHANIE RUHLE, BLOOMBERG ANCHOR: Tom, from first thing this morning there were problems with messaging, walk me through that and then the 11:32 shutdown.
TOM FARLEY, GROUP PRESIDENT, NEW YORK STOCK EXCHANGE: First and foremost, Steph, we take our role in the center of the global capital markets very seriously. We hold ourselves to a high standard of our systems being up, available, trusted at all times.
This morning the open went off as you would expect. And soon thereafter we were getting intermittent messages of customers not seeing the exact behavior that they would otherwise expect with respect to messages.
I did not feel like we had the level of trust in our systems that is required. And I made the decision working with regulatory and (INAUDIBLE) regulatory team and the counsel’s office, I made the decision, let’s suspend trading at the New York Stock Exchange, in part Steph because those New York Stock Exchange-listed stocks continued to trade elsewhere during the day.
And I told our team let’s, in a very deliberate fashion, determine what went wrong, put together multiple plans to be able come back up for the close.
RUHLE: Well, how about that, Tom? You did a great job sort of holding things firm, but you were out for three-and-a-half hours, and when you came back, volumes were still up, prices were intact, almost the beat goes on.
What does that say about our need for the NYSE?
FARLEY: Yes. The most important thing, it’s a little bit of the Hippocratic Oath, do no harm for NYSE-listed stocks. At the open, as you may know, and the close every day, the market consolidates around the New York Stock Exchange.
Those are the biggest trades of the day. Those are roughly 20 percent of total volume. In fact, our close today was a market average of 150 million shares. And so my first concern was do no harm during the day. Those stocks continue to trade elsewhere. Get the problem fixed. And get it back up and running for the close.
RUHLE: Why not roll over to your fail system, your backup?
FARLEY: We chose the least disruptive option for customers. So if we had moved to our Disaster Recovery Center, which was an option, customers would have had to do a good deal of work to be able connect to that new Disaster Recovery Center.
Contrast that with what we chose to do, which was root out the problem, put a plan in place to fix it, fix it, reopen the New York Stock Exchange, and there was no work for the customers to do to connect to the New York Stock Exchange.
RUHLE: What time this morning, when did you make the decision, we’ve got to shut this down?
FARLEY: I don’t remember exactly because I spent most of my day talking to customers and regulators and internal staff. But it was shortly after 11. And it was when I had heard enough reports that customers were not seeing the exact sort of behavior they’ve come to expect and anticipate out of the New York Stock Exchange, and that’s when I said, let’s take it down.
RUHLE: And do you attribute this to a system upgrade?
FARLEY: I’m not 100 percent certain, because as I said, most of the day I spent with customers and staff. There was a configuration problem in our system. It likely had to do with an upgrade, but that is premature, and it’s something that will come about as part of a full analysis of the situation.
It began today. We found the problem. It continues tonight, we will be looking at the steps that led us to this place. And it will continue on in the future. We are on an ever constant quest to improve the technology that we offer.
RUHLE: Tom, since you took this post, you have cleaned up a lot here. You’ve tightened the ship, shareholders have really liked what you have done, but you are leaner and meaner. Had you had a bigger staff, more IT professionals like you used to have, could this have been avoided?
FARLEY: No, this wasn’t a resource issue, Steph. I have been here ever since the Intercontinental Exchange acquired the New York Stock Exchange. I have seen the changes firsthand. We’re a more responsive organization. Customers would tell you the same.
Our technology is more responsive to the needs of customers. Our technology is by and large reliable. Today was a very unfortunate day. And I feel customers’ pain in that regard. But that is not the case.
RUHLE: Before we go, I’m worried about confidence. This week we are faced with Greece, China, today United Airlines had a problem, people are worried. Are you worried that the perception of this is going to keep people out of the markets?
FARLEY: Well, it’s important, and this just goes back to what I said, first and foremost, and our entire management team agrees with this, our chairman of the New York Stock Exchange, Jeff Sprecher agrees with this, and it’s something we’ve talked about as recently as today, it’s important that we are open for business. We have been for 223 years. And public perception is important.
So am I happy about today? Obviously not. Can we work through it as we did on the close with an average close and our customers coming back the New York Stock Exchange? And I greatly appreciate it, by the way, for our customers who are out there listening. Yes, absolutely.
And we are going to — as I said, we are going to continue to invest in our technology. We are going to continue to get better, and we’re going to learn a lot from today.
RUHLE: He has had a big day. Alix, I’ll tell you this. Outside there are TV crews everywhere, clearly the global new story of the day. But I’m walking this floor. It is business as usual. The beat seems to go on.
Video for viewing here.