Exchange Wars: Snafu Pits NYSE vs. Nasdaq

Thursday's multihour trading halt for three stocks on the New York Stock Exchange has revived the long-running "man vs. machine" debate and exposed animosity between the Big Board and its all-electronic competitor the Nasdaq.

As TheStreet.com reported Thursday, a premarket trade originating from Fidelity Investments earlier in the day was transmitted incorrectly by Citigroup's (C Quote) Lava unit, triggering a multihour NYSE trading halt for shares of AT&T(T Quote), Wyeth (WYE Quote) and Jefferies (JEF Quote).

The halt and effort to reopen trading for the stocks prompted a frantic scene on the floor of the exchange, which is often sleepy these days as more trading is being done electronically. But the real drama occurred off market -- literally and figuratively -- as the Nasdaq was later forced to break, or cancel, nearly an hour's worth of trades in Wyeth that occurred in all-electronic platforms prior the Big Board's halt.

The NYSE, in a written statement Thursday, credited floor specialists with catching the error and halting trading. A day later, the competing exchanges are pointing fingers at each other.

"Positioning this incident as a positive for the specialists is like a doctor making a patient sick then touting they have found a cure," says Nasdaq spokeswoman Bethany Sherman. "Specialists created the problem. They began posting incorrect opening indications at 9:26 a.m. and they continued to post incorrect prices through 9:56 a.m. Over 25 minutes later, the Exchange halted the stock for news pending."