Business

Leap Second: Financial Markets, Businesses Preparing For 61 Seconds

It’s not Leap Year when we add an extra day to the calendar, but Tuesday is Leap Second Day when we add an extra second to the 24-hour day.

Leap Second: Financial Markets, Businesses Preparing For 61 Seconds

The leap second is required to maintain the world’s official clocks in sync with the rotation of the Earth. Humans started keeping official time with atomic clocks (clocks that operate according to the oscillations of an atom) close to 50 years ago. However, in order to keep atomic clocks exactly aligned with the rotation of the Earth, scientists add an extra second to the day every few years.

As ValueWalk reported yesterday, adding an extra second to clocks is, however, a big deal to computers and the businesses that rely on them. There were significant computer problems at a number of major businesses across the globe the last time a leap second was added back in 2012.

More on the leap second

We’ve actually added a leap second to clocks 25 times since 1972. The last occasion was back in 2012, but it came on a weekend. The June 30th leap second will be the first one during trading hours (for some global markets) since trading at financial markets became fully electronic.

Following the last leap second in mid-2012, Internet discussion site Reddit went down. Australia’s Qantas Airways also suffered major software glitches, causing flight delays in Brisbane, Perth, and Melbourne. A number of financial firms saw their operations impacted as well.

Given the extensive leap second-related problems in 2012, businesses across the globe are more aware of the leap second, and many are better prepared. According to Linus Torvalds (the man who oversees the Linux computer operating system, which now runs so many of the leading Internet services and so much of Wall Street) the leap second is still likely to create unexpected issues. “Almost every time we have a leap second, we find something,” he said in an interview before the last Leap Second Day in 2012. “It’s really annoying, because it’s a classic case of code that is basically never run, and thus not tested by users under their normal conditions.”

The leap second is scheduled to be added 8 p.m. ET as Asian markets are opening. Related to this, most global stock exchanges have decided not to risk the chance of problems. U.S. stock markets have decided to end most after-hours trading early and others markets are moving to reset their clocks before markets start.

In specific, the Chicago Mercantile Exchange and Intercontinental Exchange will push back several electronic evening sessions until after 8 p.m ET. The New York Stock Exchange’s NYSE Arca, Nasdaq OMX Group’s Nasdaq and BATS Global Markets are planning to shut down after-hours trading 30 minutes before the normal 8 p.m. close.

Abolish the leap second?

According to Demetrios Matsakis, the chief scientist for time services at the US Naval Observatory, there’s no real reason for dealing with all the hassle and expense of the leap second. In fact, a group of official global timekeepers are proposing just that. According to them, the basic reason we’re so focused on the leap second is human nature. That is, humans generally like predictability and consistency. But in this case, they argue, it’s simply more trouble than it’s worth..

“We’re confusing the measurement of time with time,” says Matsakis, pithily explaining the conundrum.

He is actively lobbying for getting rid of the leap second, noting human already intentionally live a big chunk of our lives out of sync with the earth’s rotation. “This is what happens in the summertime,” he points out. “We do Daylight Savings.”

Matsakis might see his wish granted. This fall, members of the International Telecommunications Union ( a major global time keeping body) are planning to discuss the leap second. According to Steve Allen with California’s Lick Observatory, who closely follows the leap second and other global matters of time, the ITU discusses the abolition of the leap second at nearly every meeting. However, at the last ITU meeting, Britain, Canada, and China all moved to keep it alive despite a groundswell of support for letting it go.

Of note, given the UK has appointed itself as the world’s time keeper with Greenwich Mean Time, it’s not at all surprising that they oppose abolishing the leap second correction. If we remove the leap second, the world’s clocks and computers will drop out of sync with GMT, making it much less relevant globally.