Nasdaq Seeks Authority to Halt Other Trading

The Nasdaq Stock Market said Monday that it would ask the Securities and Exchange Commission for authority to impose trading halts across all markets, after it stopped trading for an hour in a stock last week while the shares changed hands on another market.

Nasdaq’s request is designed to prevent the kind of confusion that arose in Friday’s trading of shares of Santa Ana-based Corinthian Colleges Inc., said Silvia Davi, a Nasdaq spokeswoman.

Nasdaq briefly halted trading in Corinthian after a series of order-entry errors by one trader led to a 33% plunge in the stock price early Friday.

Thirty-nine minutes before Nasdaq resumed trading in the company’s shares, the Archipelago Exchange allowed trading as the price recovered.

“Archipelago resumed trading before the rest of the market, without coordinating with anyone,” Davi said.

After it resumed trading, Nasdaq said it would cancel trades in Corinthian made between 10:46 and 10:58 a.m. EST at deeply depressed prices. The stock quickly recovered Friday to close at $56.80, down 72 cents for the session.

The trading on Friday underscored the potential for confusion and conflict as Nasdaq and other electronic markets compete for volume in the same stocks, traders said.

On May 30, the SEC announced that Nasdaq could halt trading in a stock when it determined that system problems were affecting trading. At that time, Nasdaq had sought the power to halt trading across all electronic markets but was opposed by competitors, Davi said.

At least some competitors remain opposed. Dale Carlson, spokesman for the Pacific Exchange, which regulates Archipelago, said Nasdaq incorrectly characterized the Corinthian halt as a regulatory matter.

“It’s ludicrous in this day and age to think an entire marketplace can be held hostage to the systems problems of one,” Carlson said. As for canceling the trades, “they took a very bad situation and made it a lot worse,” he said.