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  • Writer's pictureThe San Juan Daily Star

Stock exchanges told to improve how they deal with outages

Stock exchanges and other trading platforms should draw up and make public plans for dealing with outages to provide greater predictability for customers, global securities watchdog IOSCO said on Wednesday.

Exchanges worldwide have been hit by glitches and outages for various reasons, such as software changes.

A glitch at the New York Stock Exchange (NYSE) on Monday triggered massive swings in the shares of Berkshire Hathaway and Barrick Gold, and trading halts in dozens of other companies, before the problem was fixed.

“Where trading venues have effective playbooks and outage plans in place, this provides market participants with certainty about the steps that trading venues will take in the event of an outage,” IOSCO, which is comprised of regulators from across the world, said in a report.

The report highlighted “the need for improved preparedness and management of market outages to ensure market resilience and investor confidence”.

Exchanges could also set out their “reopening strategies” to explain the steps taken for restarting trading and how orders will be managed, the IOSCO ‘best practice’ guidance said.

Trading venues that run closing auctions that determine prices used in benchmarks should also spell out what happens after an outage.

“Where a closing auction cannot be run at the scheduled time, trading venues may need to consider postponing the closing auction before cancelling it,” IOSCO said.

“If the operation of a closing auction is not possible, trading venues may need to consider how to ensure the market is provided with alternative closing prices.”

Exchanges could also seek feedback from users for a “lessons learnt” exercise following an outage, the watchdog said.

The S&P 500 and Nasdaq indexes closed at record highs on Wednesday, powered mainly by technology stocks as markets digested economic data that could support a much-expected start to the Federal Reserve’s policy easing cycle.

The May private payrolls report on Wednesday became the latest data to suggest an easing in labor market tightness that could propel the Fed to begin cutting rates this year. A report on Tuesday showed job openings fell in April to the fewest in more than three years.

“We’re seeing the economic data starting to ease up a little bit and the repercussions for that is that you’re seeing the pressure on rates come off the boil a little bit mixed in with the potential for weaker economic data, which is a pretty good recipe for the bond market,” said Jack Janasiewicz, a portfolio manager at Natixis Investment Managers Solutions in Boston.

Traders now see a nearly 69% chance of a September rate reduction, according to the CME’s FedWatch tool. Expectations had hovered around 50% last week.

U.S. 10-year Treasury yields fell to a two-month low on Wednesday after a report pointed to weaker-than-expected job growth ahead of Friday’s highly anticipated government employment report for May.

According to preliminary data, the S&P 500 gained 62.30 points, or 1.18%, to end at 5,353.64 points, while the Nasdaq Composite gained 329.34 points, or 1.95%, to 17,186.38. The Dow Jones Industrial Average rose 95.39 points, or 0.25%, to 38,806.68.

Chip stocks leapt, buoyed by gains to Nvidia and Taiwan Semiconductor Manufacturing, which both touched record highs.

Hewlett Packard Enterprise rose after forecasting third-quarter revenue above Street expectations, helped by upbeat demand for its AI servers.

Dollar Tree slipped after a disappointing quarterly profit forecast. The budget retailer said it would explore options that include a potential sale or spinoff of Family Dollar.

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