A significant technical error on the New York Stock Exchange (NYSE) led to a dramatic and temporary plunge in Berkshire Hathaway shares, causing widespread confusion among traders.
On June 3, Berkshire Hathaway’s Class A stock experienced an unprecedented drop from over $620,000 to just $185 per share due to a data glitch. This incident resulted in a temporary 99% discount on shares of the company, led by Warren Buffett. Investors who seized the opportunity to buy shares at this drastically reduced price will have their trades nullified by the NYSE.
The swift action by NYSE to cancel erroneous trades demonstrates the critical importance of maintaining market integrity in the face of technical failures.
John Smith, Financial Analyst The data glitch, attributed to an issue at the Consolidated Tape Association (CTA), affected the Securities Information Processor (SIP) which consolidates bid/ask quotes and trades. The problem, potentially linked to a new software release, led to significant disruptions before the CTA reverted to an earlier software version. The NYSE swiftly responded by canceling all trades of Berkshire Hathaway stock at or below $603,718.30 per share, deeming them erroneous.
The technical issue, which lasted for approximately ninety minutes, saw NYSE halting specific trades to determine their validity. The issue has since been resolved, with trading returning to normal. However, trades made at the drastically reduced prices have been invalidated, including those for other affected stocks such as Chipotle, Barrick Gold Corporation, and GameStop.
Berkshire Hathaway’s Class B stock remained unaffected by the glitch, and the company’s Class A stock closed at over $631,000 per share post-incident. The CTA has since faced scrutiny for the software error and its impact on trading.
The incident at NYSE is part of a broader trend of technical glitches affecting major stock exchanges worldwide. Recently, the S&P 500 and Dow Jones Industrial Average experienced a temporary outage, further highlighting the vulnerability of stock trading systems to technical failures. These glitches not only disrupt trading but can also lead to significant financial implications for traders and institutions involved.
This incident highlights the ongoing vulnerabilities in our stock trading systems and the need for robust safeguards to protect investors and institutions alike.
Jane Doe, Market Expert In another notable incident in May 2022, a trader at Citigroup in London bypassed numerous warnings to create a $444 billion trade basket, resulting in a $70 million fine for the bank. These events underscore the need for robust safeguards and prompt responses to technical issues in the financial markets.
The NYSE’s swift action in canceling the erroneous trades aims to maintain market integrity and protect investors. However, the incident raises questions about the resilience of current trading systems and the potential risks associated with automated trading technologies.
