Nasdaq's Facebook glitch came from 'race conditions'
Nasdaq may pay out as much as $13 million due to a hard-to-find software bug
IDG News Service - The Nasdaq computer system that delayed trade notices of the Facebook IPO on Friday was plagued by race conditions, the stock exchange announced Monday. As a result of this technical glitch in its Nasdaq OMX system, the market expects to pay out $13 million or even more to traders.
A number of trading firms lost money due to mismatched Facebook share prices. About 30 million shares' worth of trading were affected, the exchange estimated.
On Friday, Nasdaq had delayed Facebook's IPO by 30 minutes. For about 20 minutes, the exchange stopped confirming trades placed by brokers, who were unable to see the results of their orders for more than two hours.
The problem stemmed from Nasdaq's IPO Cross, a pre-IPO auction process the exchange put in place in 2006 that allows traders to place orders and agree on an IPO price before the stock is officially launched, according to a Nasdaq statement issued on Monday.
Typically, in the minutes before an IPO launch, IPO Cross will run an auction in which traders can put in bids, and then calculate an opening price using these auction bids. The opening price would then be fed to the Nasdaq tape. After the opening price is calculated and just before it prints its opening price to the tape, IPO Cross checks to see if any additional orders have been placed since it started its calculation. In Facebook's case, additional orders kept coming in, which caused IPO Cross to recalculate the price multiple times, resulting in the delay past the 11 a.m. scheduled opening.
The problem was only fixed at 11:30 a.m., when Nasdaq switched to a backup version of the IPO Cross matching engine, which allowed the stock to go live on Nasdaq. Unfortunately, this secondary instance of the engine used calculations made at 11:11 a.m., ignoring any bids entered in the system since then. Also during this time, some customers did not receive order confirmations or had their connectivity from their own systems momentarily cut. Orders entered between 11:11 a.m. and 11:30 a.m. were not executed until after 11:30 a.m., resulting in trades that were not fully understood by brokers.
Nasdaq characterized the problem as a race condition. A race condition occurs when two or more parts of a program that rely on each other get locked in an infinite loop, halting forward progress of the program as a whole. The race condition in this case took place between the auction process and the final calculation of the IPO price.
While most race conditions can be identified by simply testing programs while in development, in some cases they may not become apparent until the software is stressed under heavy usage, said Scott Sellers, CEO of software provider Azul Systems. Azul offers a version of the JVM (Java Virtual Machine) engineered for extreme scalability.
- Facebook loses the cool factor with bored teens
- Facebook loosens its rules on teen privacy
- Facebook and Cisco partner to offer free Wi-Fi at stores
- Facebook goes after Twitter and its lock on 'immediacy'
- Under legal pressure, Facebook clarifies how it uses your data
- Zuckerberg's goal of connecting 5B people could take 20 years
- Facebook's Zuckerberg wants to connect the rest of the world
- Security expert kick-starts fund to pay Facebook bug finder a $10K bounty
- Facebook to test new mobile payment service
- Talk to me, Facebook! Social net buys speech recognition company
- 18 Hot IT Certifications for 2014
- CIOs Opting for IT Contractors Over Hiring Full-Time Staff
- 12 Best Free iOS 7 Holiday Shopping Apps
- For CMOs Big Data Can Lead to Big Profits
- Slideshow: 5 ways to lock down your mobile device
- Slideshow: 10 mistakes companies make after a data breach
- How to rob a bank: A social engineering walk through
- Which smartphone is the most secure?
China says to Chiang Kai-shek all Bitcoins at the door.
China marches long and hard over internal financial institutions, proclaiming that Bitcoins "should not and cannot be used as a currency". The news sent Bitcoin exchanges into a dive like cormorants in the deep China Sea. But all is not lost -- or is it? Bitcoins have been bubbling back to the surface, or has China's stance drained all enthusiasm? In IT Blogwatch, fearless leaders and bloggers quote pearls of wisdom from the little red book of Bitcoin. Not to mention: Financial advice from Whiz and Ice...
- IT Certification Study Tips
- Register for this Computerworld Insider Study Tip guide and gain access to hundreds of premium content articles, cheat sheets, product reviews and more.
- Make or Break: New Auto Products Must Go To Market On Time
- This Webcast quantifies the value of time to market for the auto industry and highlights how Primavera Enterprise Portfolio Management can help organizations.
- Stock Shock: The effect of project and portfolio management on share price
- In this independent report, you'll see the intrinsic connection between long-term capital investment and short term market performance -- and how this can...
- Hedge Your Bets
- This report explains how visibility and increased governance is key to reducing risk.
- In the Firing Line
- CEOs Are Increasingly Being Held Accountable; How susceptible is the CEO's reputation to poor performance across the project portfolio?
- The CISO's Guide To Virtualization Security
- This guide describes the security challenges within virtualized environments and shows how to apply the concepts of Forrester's Zero Trust Model of information... All Financial IT White Papers
- Live Webcast Research Report: The Big Data Opportunity for HR and Finance If CEOs, CFOs, CIOs, and CHROs want to drive their businesses forward, they will need to quickly recognize the enormous value of big...
- Live Webcast The Freedom to Run Your Business Your Way Vendors are challenged to create flexible systems that customers can tailor to particular business strategies and industry needs. But the flexibility should not...
- Live Webcast The Business Value of Human Capital Management for Finance View now >>
- HR and Finance Were made for Each Other View now >>
- The Value of Human Capital for Finance Professionals View now >>
- The Business Value of Human Capital Management for Finance View now >>
- The Freedom to Run Your Business Your Way Vendors are challenged to create flexible systems that customers can tailor to particular business strategies and industry needs. But the flexibility should not...
- Research Report: The Big Data Opportunity for HR and Finance If CEOs, CFOs, CIOs, and CHROs want to drive their businesses forward, they will need to quickly recognize the enormous value of big...
- All Financial IT Webcasts
Computerworld's Best Places to Work in IT 2013 list featured Quicken Loans, Securian, Vanguard and other top finance organizations. Honorees say the distinction helps them recruit top talent and boost staff morale.
Want to join this elite group? Nominate your organization for our 2014 list.