New York Stock Exchange's 'Manual Error' Briefly Wiped Billions Of Dollars In Market Value—Here's What Happened

view original post

Topline

The New York Stock Exchange on Wednesday said a manual error was behind the technical issue that forced the sudden halt of dozens of stocks and briefly wiped billions of dollars in market value from some of the world’s largest companies on Tuesday—shedding some light on a conundrum that has stunned traders and already piqued interest from regulators.



Traders look at displays for information about a trading malfunction on the floor at the New York Stock Exchange. Copyright 2023 The Associated Press. All rights reserved.


© Provided by Forbes
Traders look at displays for information about a trading malfunction on the floor at the New York Stock Exchange. Copyright 2023 The Associated Press. All rights reserved.

Key Facts

In a Wednesday status update, the NYSE said the “root cause” of the Tuesday technical issue was a “manual error” involving the exchange’s disaster recovery configuration, which kicked off trading without the usual opening auction that helps floor traders set the opening prices for stocks.

The sudden error, which occurred as trading started Tuesday at 9:30 a.m. ET, sparked massive volatility in a slew of stocks, with big names like McDonald’s, Walmart, Wells Fargo and Exxon Mobil immediately swinging as much as 25%—causing market value swings of tens of billions of dollars in individual names.

Within minutes the exchange halted trading of more than 80 stocks as it worked to rectify the issue, with systems and prices ultimately returning back to normal by 9:48 a.m. ET.

By Tuesday afternoon, the exchange said trades affected by the wild fluctuations would be declared “null and void,” and on Wednesday, it revealed about 4,341 trades in 251 symbols will ultimately be busted as a result of the “clearly erroneous” prices.

“Such events are extremely rare, ” NYSE chief operating officer Michael Blaugrund said in an emailed statement on Wednesday, noting the exchange ended Tuesday with a normal market close and is “thoroughly examining” the day’s activities.

Loading...

Load Error

What We Don’t Know

It’s still unclear whether such an event could happen again or how much money traders may have lost; however, the NYSE says it undid most of the erroneous trades on Tuesday and will process the remaining breaks on Wednesday.

What To Watch For

In a Wednesday statement, a spokesperson for the Staff Securities and Exchange Commission said agency staff are reviewing the trading issue and have been in touch with the relevant exchanges.

Further Reading

NYSE glitch leads to busted trades, prompts investigation (Reuters)

Continue Reading