NASDAQ Shuts Down

nasdaqThe NASDAQ exchange stopped for a moment on August 22nd. This caused brokers and investors to pause, panic, and wonder what happened. During the few minutes that the exchange was down, lots of difference speculations and thoughts flew across Twitter and other networks. When a stock exchange stops, people panic.

But, this was just a technical glitch. It wasn't an act of terrorism or any other major phenomenon, as Twitter folks might have assumed. It does bring up an interesting problem, though. You see, the images of men in suits strolling across stock exchange floors screaming numbers and throwing papers is nearly over. Today, computers rule the stock world.

What's Worse?

The NASDAQ (and other exchanges) switched from human hands to computer programs long ago. This seemed like a wise switch. Computers were more effective, efficient, and could sort and sift through numbers faster than a human with a calculator. But, computers also leave room for error, and those errors can be huge.

Even stock exchange systems have to be hosted, and that means that a stock exchange can come crashing down at any moment. Think back to the Facebook IPO a little while ago. Remember when the NASDAQ was fined $10 million for shutting down when Facebook went public? The Securities and Exchange Commission had this to say about the technical glitch:

“Exchanges have an obligation to ensure that their systems, processes, and contingency planning are robust and adequate to manage an IPO without disruption to the market.”

So, even if it's not by human error, exchanges have to make sure that servers are running and processes are up to date. If something goes wrong, the exchange has to pay a penalty (the Facebook penalty was the biggest one ever handed out, by the way). Even though the August 22nd shut down was momentary and didn't stop any trades from happening, really, it still happened.

NASDAQ Shuts Down: Making Sacrifices

While your website may not operate on the same level as the NASDAQ, it's still vital that you keep your systems running smoothly for the sake of your clients. If you own a cheap hosting company, this means making sure that all of your processes are in place too. You might not be fined millions by the Security and Exchange Commission, but you can be sued by your customers – keep that in mind.

The moral of this story is: if you think that your system might have an issue in the near future, fix it before everything goes awry. Otherwise, you could be looking at a hefty lawsuit. The NASDAQ shut down on the 22nd did not damage the market, though many people were in a panic when the exchange stopped working.

Questions? Comments? Want to know what your are responsible for if you run a hosting company? Ask away, or ask a question for an expert to answer.

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