In an under-reported story, it appears that the large New York Stock Exchange (NYSE) drop of 416.02 or 3.29 percent last 27 February 2007 (which was at the time the seventh largest drop in exchange history) was in part related to a bigger than previously admitted to computer problem at Dow Jones.
According to the AP story, "Part of the Dow's drop turned out to be not a decline, but a miscalculation. ... high volume that day overwhelmed a data-checking program on the company's [Dow Jone's] Financial Information Distribution System, a server that delivers real-time trade data used to calculate Dow Jones index levels."
"That meant the readings of the Dow were delayed, and therefore misleading, beginning at about 12:50 p.m., but the discrepancy was not caught until 2:20."
"At 2:56, Dow Jones employees flipped on a backup system, which wasn't running the data-checking program. At 2:59, the Dow's calculation caught up with the previous trades, falling 170 points almost instantaneously."
The NYSE claims that the problem didn't have much effect on the market that day, but I would be surprised that a 170 point instantaneous drop wouldn't have some effect on somebody.
Dow Jones promises that it will be quicker in the future than the 36 minutes it took to switch on the backup system the last time.
