NASDAQ Is The New Poster Child For Wall Street Reform

Circle the wagons, because what everybody thought would happen is in full force less than 24 hours after the NASDAQ NDAQ shutdown: politicians, media outlets and traders calling for Wall Street reform -- and it’s only going to get worse.

Thursday, not long after noon EST, 3,200 companies from 37 countries stopped trading. Nobody knew what was going on at the time, but a faulty connection between NYSE Arca and the data processing subsidiary of NASDAQ was the cause of the problem, according to NASDAQ. The problem wasn’t completely fixed until 3:25 p.m.—more than three hours after the issue began.

NASDAQ said that the issue was corrected within 30 minutes of the shutdown, but the big Wall St. players urged NASDAQ not to re-open until a well-thought-out plan could be put in place that would allow some orders to be cancelled and not cause a flood of instant activity that could have disastrous consequences.

In the end, the systems came back online, the markets were orderly, and other than a lot of annoyed people, little damage was done, according to many of the professional traders who have commented to media outlets around the world.

But if you talk to Washington and some media outlets, this is a much bigger problem than traders who were unable to trade millions of shares of Apple AAPL, Facebook FB, or the many other “Tape C Securities”—a fancy term that simply means, NASDAQ-listed stocks.

READ: NASDAQ Halted: What is a Tape C Security and When Will the Exchange Reopen?

Mary Jo White, Chairman of the SEC, has already said that leaders of the major exchanges would be called to Washington for a meeting about “accelerating ongoing efforts to further strengthen our markets,” according to a statement.

During what CNBC called a “Frozen NASDAQ”, anchors and guests frequently commented on how the retail investor is already un-trusting of the current market system and this event will only serve to build on that distrust.

Famed investor, Dennis Gartman said to CNBC, "This is such an embarrassment to the entire financial community. To have the NASDAQ go down as it has; to be down three hours—it's one thing to be down for five minutes—to be down for three hours is absolutely inexcusable.”

What happens next? Meetings, media commentary, more upset traders, probably some lawsuits and maybe a Congressional subpoena or two. What we know for sure is that this was the perfect way to rekindle the Wall Street reform flame.

Disclosure: At the time of this article, Tim Parker was long Apple.