Last week's three-hour shutdown of Nasdaq stock market trading -- traced in this Bloomberg story to a glitch on an order from the rival New York Stock Exchange's ARCA electronic market -- provoked the usual public scoldings, including this stern announcement from new Securities and Exchange Commission chief Mary Jo White, and a lot of speculation (see for example this Wall St. Journal story) that someone will have to pay.
But given the SEC's recent habits of slapping Nasdaq and NYSE when they cut corners at customers' expense, it's more reasonable to think the real lesson from Wednesday's halt is that the Nasdaq stock market, headed by ex-Bala Cynwyd-based Susquehanna Investments executive Eric Noll, who report to Nasdaq corporate boss Robert Greifeld, is getting the message.
In this June column, I noted how Dan Hawke, the SEC's Philadelphia-based markets chief, fined Nasdaq for messing up the Facebook IPO by letting some Sell orders vanish unfilled into a software glitch, costing investors potentially hundreds of millions, while executing later orders.
Maybe this time Nasdaq got the message and just shut down all trading when a problem surfaced, instead of filling what to outsiders look like random trades.
I don't know if that's what Nasdaq's lawyers at Philadelphia-based Ballard Spahr are advising. Nor will Hawke say whether he approves of the way Nasdaq shut down instead of letting trading drift this time.
Hawke's more basic and long-term message to the for-profit Nasdaq and NYSE has been to upgrade their technology if they expect to keep managing ever-more-competitive and complex high-speed trades with the government's blessing.
Hawke and the SEC have declined to mount a National Security Agency-style surveillance of every trade. Instead they're pressuring the markets to do the job right -- or risk getting slammed again.
Another thing Hawke won't say: what happened to his colleague Elaine Greenberg, who headed the SEC's mostly low-profile municipal securities market-policing unit from another Philadelphia office. Greenberg quit in June, just as the pending Detroit bankruptcy and other muni blowups began to make the field interesting -- and lucrative, apparently, for defending crooked bond issuers and their well-paid advisers from the fraud offenses Greenberg used to accuse them of.
Reached at home, Greenberg won't say why she quit, or what her plans are, either. She was supposed to leave the Philly SEC office in July "for the private sector," but we haven't seen a hiring notice so far.