Credit Suisse fined $150,000 for algorithm failing

15 January 2010

NYSE has fined Credit Suisse $150,000 for failing to control an algorithm which led to hundreds of thousands of “erroneous error messages” bombarding the exchange.

The incident, which occurred in November 2007, led to a queue of more than 900 messages across five NYSE trading posts.

According to the NYSE, the messages became frozen in the queue meaning that the posts could not be closed in time.

Ray Pellechia, a NYSE Euronext spokesman, told the Financial Times: “If you had multiplied this many times you’d have had a problem on your hands."

He added that the case had been pursued by the NYSE to provide a warning to other firms and to prevent the chances of a similar instance taking place in the future.

In a statement, the NYSE said that Credit Suisse had broken Rule 342 by not managing the proprietary algorithm effectively.

“The firm also failed to properly monitor the operation of the algorithm, as evidenced by the fact that the firm was unaware that hundreds of thousands of messages sent by the algorithm were being rejected by NYSE systems until being notified of the issue by NYSE, “ the organisation explained.

EWT and the Cutler Group were among the other organisations recently disciplined by NYSE.

By Jim Ottewill

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