NEW YORK, Jan 24 (Reuters) – A glitch on the New York Stock Exchange prevented auctions from opening for a slew of stocks on Tuesday, causing widespread trading halts, confusion over whether orders were being filled at correct prices and transactions on more than 250 securities being broken down.
The NYSE, which is owned by Intercontinental Exchange Inc (ICE.N), said a “system glitch” prevented auctions from opening in a subset of its listed securities. The shares began trading with no impression of an open, causing erroneous prices that the exchange says will be declared null and void.
A spreadsheet released by the exchange showed 251 stocks affected.
The glitch – the latest in a series since the 2010 “flash crash” – has impacted shares of major companies including ExxonMobil (XOM.N), 3M (MMM.N), Verizon (VZ.N ), McDonald’s Corp (MCD.N), Wells Fargo (WFC.N) and WalMart (WMT.N). The companies did not immediately respond to a request for comment.
“What appears to have happened is a technical glitch where all of my NYSE open orders were automatically canceled even though some of them should have been filled,” said Dennis Dick, trader at Triple D Trading.
“They’ve fixed that now, but it’s going to be a big mess to clean up.”
The U.S. Securities and Exchange Commission said it was reviewing the matter.
The exact cost of the fallout from the problem is unclear, but the cost to brokers and retail traders is likely to be in the eight-figure range, according to a person at a major brokerage who spoke under on condition of anonymity because the issue is sensitive. .
“Obviously there were a lot of stocks that had major issues,” said Joe Saluzzi, co-director of trading at Themis Trading in Chatham, New Jersey. “It’s a bit of a mess.”
Saluzzi said there was “zero fault tolerance” among traders for problems when opening and closing the trade.
“It’s a failure, there’s no coating,” Saluzzi said. “There are definitely people losing money today who aren’t happy.”
The opening auction gaffe comes as the SEC plans to route most retail stock orders through auctions, in a bid to secure better prices for individual investors.
“The SEC’s plan to make us all cool and groovy with mainstream auctions leaves a lot to be desired,” said Georgetown University finance professor James Angel.
“Auctions are much more complicated than it seems. A lot of things can go wrong,” said Angel, who helped work the auction process for Nasdaq Inc (NDAQ.O).
NYSE-listed stocks trade on all 16 US exchanges, which use NYSE prices.
Saluzzi said having multiple exchanges doesn’t help in a situation like this because the only place to trade an open order on a stock listed on the New York Stock Exchange is that exchange itself. .
The NYSE is the only major U.S. exchange that still uses a dealing room, as well as electronic trading, a hybrid model that the exchange says facilitates price discovery when the market opens and closes and during trades. periods of trade imbalance or instability.
Technical errors on exchanges can erode market confidence.
“I had a few discretionary trades to make, but elected to wait about another 30 minutes after things seemed to normalize to make sure there were no issues,” said Seth Hickle, derivatives portfolio manager at Innovative Portfolios in Indianapolis, Indiana.
To hold exchanges accountable for these issues, in 2014 the SEC adopted a comprehensive set of business continuity and disaster recovery rules called Regulatory System Compliance and Integrity (Reg SCI).
In March 2018, the NYSE was the first exchange fined under Reg SCI. The $14 million fine was partly related to a nearly four-hour trading halt in July 2015 resulting from a faulty software deployment.
Reporting by John McCrank, Chuck Mikolajczak, Carolina Mandl and Doyinsola Oladipo in New York, Douglas Gillison in Washington and Medha Singh and Amruta Khandekar in Bengaluru; Editing by Megan Davies, Daniel Wallis and Rosalba O’Brien
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. problem NYSE leads of canceled transactions triggers a investigation