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SEC may sue owner of NYSE over '15 outage in trading

| Tuesday, Feb. 7, 2017, 10:12 p.m.

The owner of the New York Stock Exchange warned that regulators may sue the company over its handling of a 2015 glitch that halted trading on NYSE for nearly four hours and raised worries about the fragility of financial markets.

Staff at the Securities and Exchange Commission have recommended filing civil charges against Intercontinental Exchange, NYSE's parent, over how it responded to the software configuration issue that led to the trading interruption, the company's annual report revealed Tuesday.

On July 8, 2015, the Big Board went through its worst outage in its 223-year history after a botched software upgrade backfired and ended up shutting down almost all trading for nearly four hours.

“We dispute the appropriateness of the potential charges,” ICE Chief Executive Officer Jeffrey Sprecher said on an earnings conference call with analysts.

NYSE has sent the SEC a letter defending its actions before and during the outage, he said.

“At the end of the day it was a technology outage, it was very unfortunate, it was embarrassing and a black eye but we don't believe that it actually violated any law.”

The outage resulted from a flawed software rollout the previous evening that caused communication problems between a NYSE trading unit and customers. The NYSE eventually canceled all open orders as it worked to solve the problem.

Previous SEC enforcement actions against exchanges include a $14 million settlement in 2015 to BATS Global Markets over charges that two exchanges acquired by BATS had given advantages to certain high-frequency trading firms.

In May 2013, the SEC penalized Nasdaq Inc. $10 million to settle charges stemming from mistakes made during Facebook's initial public offering in 2012.

ICE on Tuesday said its net income in the fourth quarter dropped to $352 million, or 59 cents per share, from $370 million, or 66 cents per share, a year earlier.

Excluding acquisition-related expenses and other one-time items, the profit was 71 cents a share, topping analysts' average estimate by two cents, according to Thomson Reuters.

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