Nasdaq Admits to Blunder With New Trading Software

The Nasdaq stock market, already criticized for missteps in implementing a new small-order trading system, has admitted to a blunder in its new high-tech trading software.

Over the weekend, traders installed the trading software as part of a Nasdaq effort to upgrade the small-order trading system to a more advanced Windows platform. But Monday morning, when traders performed the keystrokes that enter a command to execute a trade, messages on the screen confirmed that the trade was taking place on the N-Prove system, an earlier Nasdaq experiment that was, in effect, scrapped before it was implemented.

In March, Nasdaq officials unveiled another alternative, the Aqcess system, the market’s latest attempt at giving individual investors more price protection than they get now. A Nasdaq spokesman said the new software package should have referred to the new system.

So why does the software refer to N-Prove?

“Software takes time to write,” the spokesman said. “We were writing it earlier this year, when we expected that the N-Prove system would be operational.”

None of the “functionality” is different from the system currently used, the Small Order Execution System--except that it’s performed on a Windows platform.

There’s another twist in the tale.

When asked if Nasdaq had sent out new SOES software incorrectly labeled N-Prove that should have read Aqcess, the spokesman said-- in effect--not quite.

It seems Nasdaq now isn’t planning to use the name Aqcess. It’s run into a copyright problem, the spokesman said, and will now call the software N-Aqcess.

Michael McCarty of Datek Securities, one of the so-called SOES bandits who has opposed Nasdaq’s efforts to introduce new small-trading systems, said: “It’s still the same system as SOES. It’s just mislabeled.

“But it shows they [Nasdaq officials] are dropping the ball. They shouldn’t go ahead and release something with the wrong labels on it,” McCarty said.