I’m not sure I’ve heard of this one, but on Thursday, August 22, 2013, the US Nasdaq Stock Exchange closed for three hours due to a communication problem. Researchers are still trying to understand exactly what happened; however, we should probably wonder if this problem was caused by the Nasdaq CIO.

Crime scene

So what exactly happened on the Nasdaq stock market? The Nasdaq is an American stock exchange. Its name means “National Association of Automated Quotations of Securities Dealers”. Thursday, August 22, 2013 at 10:57 am they started having problems with their automated systems that share stock information with other stock exchanges.

A problem of “momentary interruptions in the diffusion of prices” affected a system that groups the data of the exchanges that trade in Nasdaq securities. Those problems lasted for six minutes before the system returned to normal operation, according to a market status message issued by the exchange. Well, we can all understand that, right? Every IT system can have a momentary failure.

However, about an hour later, Nasdaq said there were problems sending quotes to the same system. As a result, Nasdaq stopped trading at 12:14 pm EDT and the options market followed suit at 12:20 pm EDT. Now this is a big problem. a complete stock market close. All those high frequency traders and algorithms that are constantly buying and selling stocks for a lot of meager profits, suddenly they were stuck with the stock market.

Who is responsible?

Nasdaq trading stopped at 12:15 pm due to an apparent problem with the Nasdaq Securities Industry Processor, or SIP, aggregating pre and post-trade information on Nasdaq-listed securities from a variety of different exchanges. Ultimately, the SIP server was responsible for the outage. However, who is responsible for SIP?

Brad Peterson is Nasdaq’s Executive Vice President and Chief Information Officer (CIO). Finally you are responsible for everything that happens in your IT department – including the correct operation of the SIP servers. At the end of the day, this interruption is Brad’s fault – he understands the importance of information technology and this kind of thing should never happen under his supervision.

What went wrong? The current thinking is that Nasdaq’s IT department has spent a lot of time worrying about how to accelerate business information to meet the needs of the algorithms and high-speed operators that they you have not been doing a proper IT system risk analysis. What they couldn’t do is take a look at all the interfaces Nasdaq’s IT department has with the outside world and prioritize them based on how expensive a disruption would be to any one of them. If they had done this, they would have realized that the SIP system needed more than one backup system to back it up, just in case!

What does this mean for you?

As the person in the CIO role, you are responsible for everything that happens in your IT department. If you are the CIO of the Nasdaq Stock Exchange, this means that you are responsible for making sure your IT systems can communicate with everyone else. If they can’t, so it’s your fault.

The Nasdaq Stock Exchange experienced a disruption and it is increasingly beginning to look like the Nasdaq CIO is at least partially responsible for creating the IT environment that allowed this event to occur. Keeping a good inventory of their IT systems and their interfaces and then taking the time to classify them based on the impact of an outage allows the CIO to determine where they should spend their time. Clearly, this did not happen on the Nasdaq.

As a person with the CIO job, you should always Be on the lookout for the weakest link in your IT department.. You need to know where an outage could have the greatest impact on all the systems that interact with your IT department. Nasdaq CIO Brad Peterson was clearly spending his time solving other problems and allowed this disruption to creep up on him. Hopefully the problem has already been revealed and you will spend more time making sure it doesn’t happen again.