Nasdaq Execution System Restored After Morning Technical Glitch

The Nasdaq's automated dealer-to-dealer communications service, SelectNet, which is heavily relied on by brokerages and trading shops to execute trades in Nasdaq securities, wasn't working for the first half-hour of trading this morning.

The system, which froze after Nasdaq officials unsuccessfully attempted to increase the system's capacity, is now working and trading has resumed normally.

Nasdaq dealers use SelectNet to negotiate terms and execute trades between each other, but the system went down at 9:15 a.m. EDT, hindering dealers' ability to execute trades in the fashion they're accustomed to. Between the opening bell and about 10 a.m., dealers had to rely on proprietary trading systems, ECNs such as Instinet (which are not limited to dealers) and that quaint device called the telephone, which is hardly used anymore.

When SelectNet is down "you're not able to execute," said Kurt Soderberg, a trader at Miller Tabak. "You get back messages that it's been rejected, or you get error messages that say 'invalid function.'" ...