A software bug that cropped up when CBOE Holdings Inc. was making initial preparations to lengthen the trading day was the 'root cause' of the problems that kept the Chicago Board Options Exchange from opening for half of Thursday.
CBOE staff identified and addressed the bug early Thursday, CBOE Chief Executive Bill Brodsky said in a memo late Monday to clients.
But it was only as the opening approached that it became clear that the software issue was not fully resolved, and the decision was made to delay the opening, he said in the memo, also signed by Ed Tilly, who is slated to take over as chief executive next month.
The outage occurred just one day short of the oldest U.S. options market's 40th anniversary, and came just days after hackers attacked the website of brokerage Charles Schwab Corp and a false news report on the Associated Press's Twitter account sent the stock market into a brief but steep tailspin.
CBOE executives had earlier said the problem was not a cyber attack, but Monday's memo to clients was its first public explanation of the failure.
Delaying the opening, rather than switching to a back-up trading system that could have allowed trading to continue, was "the most effective solution to the software problem given the information available when the bug surfaced," they said in the memo.
"Much of the delay in the late opening, in fact, was in thoroughly preserving the integrity of the orders we had already received that morning," the memo said.
The memo blamed the media for publishing "erroneous stories" about the cause of the disruption.
It said that preparation for the extension of trading hours "exposed and triggered a design flaw in the existing messaging infrastructure configuration."
A spokeswoman declined to provide any further explanation.
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