(December 5) – “The implementation of a Nasdaq Stock Market system designed to ease the market’s barrage of data traffic and improve its efficiency has been postponed for the second time, until Jan. 22,” writes Kara Scannell in today’s Wall Street Journal.

“The delay in launching what is known as the SuperSoes system comes after software problems at one vendor left several traders frustrated during a systems-wide test on Saturday involving 200 trading firms and other Nasdaq market participants. (‘Soes’ is an acronym for ‘small-order execution system,’ though the new system won’t be limited to tiny orders.)”

” ‘Nasdaq systems functioned successfully, but some vendor market-maker and ECN systems need to be updated to accommodate this new technology,’ said Scott Peterson, a Nasdaq spokesman. ‘The additional time will allow market participants and venders to fine-tune their systems.’ ECNs, or electronic communications networks, are alternative trading systems that trade Nasdaq stocks.”

“But that is no consolation to traders that have been preparing their staffs and trading systems for months. ‘This is a tremendous hardship,’ says Harvey Houtkin, chief executive officer of All-Tech Direct Inc., a Montvale, N.J., day-trading firm. ‘They swore to us that this was going to be the final delay.’

“The Security Traders Association, Wall Street’s trade group representing traders, met last night to discuss the matter.”

“The test caused headaches because traders haven’t used the system before, but was further complicated when software provided by a large vendor caused some malfunctions.”

” ‘Our systems person says it went fine. Traders say it was chaos,’ said Andrew Madoff, director of Nasdaq trading for Bernard L. Madoff Investment Securities, a New York market maker. ‘With more than 200 firms participating in the test, things are bound to get confusing.’ “

“Tim Grazioso, who heads Nasdaq trading at Cantor Fitzgerald Inc., said, ‘We tested the system, had some questions and got some of those answered. That’s what you want to accomplish in a test.’ “

“The test and the subsequent delay, however, also raise the question of how confident traders are in Nasdaq’s planned move to quoting stocks in decimals rather than fractions — a move that the New York Stock Exchange has already undertaken on a pilot basis — given glitches in the trading system before on heavy volume days. ‘When are we ever going to get decimalization if they can’t do SuperSoes?’ Mr. Houtkin asked.”

“A Nasdaq spokesman says decimalization plans are on schedule to start with select stocks March 12 and are expected to expand to include all Nasdaq stocks by April 9 of next year.”

“SuperSoes, meanwhile, was initially scheduled to take effect on July 10 but was then pushed back to next Monday. SuperSoes is an interim step to the proposed SuperMontage, Nasdaq’s plan to overhaul its central system to make all data about every Nasdaq stock available in one forum. It was first proposed in October 1999 but is being contested by ECNs. The Securities and Exchange Commission is expected to rule on it later this year.”