Return to Transcripts main page
American Morning
NYSE Chairman Discusses Glitch That Shut Down Trading
Aired June 08, 2001 - 10:39 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RHONDA SCHAFFLER, CNNfn ANCHOR, MARKET CALL: Chairman and CEO Dick Grasso is standing by.
Dick, we want to welcome you to MARKET CALL and please bring us up to date on the situation going on at the Big Board with stock trading halted.
DICK GRASSO, CHMN. & CEO, NEW YORK STOCK EXCHANGE: Hi, Rhonda. Thank you for having me.
This morning, based on an overnight release of a new software change, half the trading floor was not receiving systemic traffic. And as you know, a very high percentage of our orders from the small investor come here electronically. So we opened this morning, half our floor was operating seamlessly and as smooth as any typical day. The other half of our floor was not receiving our electronic traffic and we felt it was important for us to interrupt the entire market.
Clearly, we have the option under these circumstances, Rhonda, of a continuing trading in half the list or continuing trading in the entire list provided that we recognize that half the floor would only receive the institutional order flow, not the retail order flow, and that`s not fair. That`s simply not consistent with our goal of serving the largest and the smallest equally. And so, in the interest of fairness and in the protection of investors, we`ve interrupted the market until 11:15 a.m.
SCHAFFLER: Then at 11:15 a.m., Dick, every stock will be open for trading as normal?
GRASSO: That`s correct.
SCHAFFLER: Dick, this is a highly unusual occurrence at the New York Stock Exchange where you pride yourself on technology improvements.
GRASSO: We do. And we`re constantly making changes to our system to better serve the customer. On a typical trading year, Rhonda, we probably make between 200 and 300 software changes each year.
Literally, every night something is folding into the electronics of our marketplace to make it a better marketplace. Last night we entertained a new software release, which unfortunately, didn`t meet our standard. Our standard is 100 percent reliability. We only got that for half our trading floor this morning. And so, in the interests of continuing to innovate, we will make changes, but we will also fall back to the prior software and ask all of the tough questions: what happened and why?
SCHAFFLER: Who makes the software
GRASSO: Well, Rhonda, it`s not fair for me to say this is the problem of a software vendor. This is the problem of the New York Stock Exchange. The buck stops right here. We release our technology company takes the best-of-breed from all of the software providers, integrates those changes into our network. It`s our responsibility, it is not the responsibility of any one software company.
SCHAFFLER: I guess, Dick, the one question, too that some people would have sticking in their minds is isn`t there a backup plan if something would go down, even if there is a new software in place?
GRASSO: Well, there is and that`s the plan that`s being folded in, Rhonda.
It is important to recognize that on an average day, an average for us about 1.2 billion shares, about half our order flow in terms of share volume - and more than 90 percent of our orders are arriving here electronically. So the backup plan is to make certain that we never, ever fail to serve all of those orders in an equal and I think, a very thoughtful way. Everyone, the largest and the smallest, having opportunity to capture price. It is rare. It`s been - I made a mistake a bit earlier on a different network saying, it`s been since 1998 that we`ve had to interrupt the market. If you can think of that in the course of three years, we`ve made perhaps as many as 1,000 software changes without any market interruption. This is one of those rare occurrence that any technology company will experience and you have to do what`s right, not what`s necessarily expedient.
SCHAFFLER: Dick Grasso, chairman and CEO of the New York Stock Exchange. Thanks for joining us.
We very much appreciate it.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
