A software glitch at the New York Stock Exchange (NYSE) on Monday morning caused an unexpected drop in the stock price of several companies, including Warren Buffett’s Berkshire Hathaway Inc., which saw its value plummet by 99% for a brief period. This incident was part of a broader trading disruption that affected about 40 stocks, causing significant confusion and concern among traders.
The error occurred around 9:45 a.m. in New York when the Consolidated Tape Association (CTA), operated by an NYSE subsidiary, implemented a software update. This update mistakenly halted trading on numerous stocks and displayed drastically incorrect prices. The problem was resolved within 45 minutes by switching to a backup data center with a different software version.
We’ve gotten used to huge amounts of uptimes without exchange incidents, so when a couple of glitches in a row occur it is notable.
Steve Sosnick, Chief Strategist at Interactive Brokers LLC The NYSE has announced that it will cancel the erroneous trades, including those of Berkshire Hathaway, and is currently reviewing the trading halts to determine if further cancellations are necessary. The trades affected Berkshire’s Class A shares, which momentarily traded at $185.10 compared to their previous close of $627,400.
This malfunction is the third significant issue to impact US markets in the past week. The previous Thursday, the S&P 500 Index faced a similar glitch, and two days prior, there were problems with data dissemination. Although this particular disruption did not affect Nasdaq-listed shares and had a minimal impact on the broader market, it raised concerns about the stability of trading infrastructure.
Steve Sosnick, chief strategist at Interactive Brokers LLC, commented on the situation, suggesting that while the incidents might be coincidental, they are notable due to the rarity of such glitches in recent times. Jonathan Corpina, senior managing partner at Meridian Equity Partners, expressed curiosity about the root cause of the issue, emphasizing the need to understand how it occurred.
I understand what happened, but I want to understand how?
Jonathan Corpina, Senior Managing Partner at Meridian Equity Partners The NYSE operates multiple exchanges, consolidating order data through the Consolidated Tape Association, which includes Tapes A and B, while Nasdaq operates Tape C. These data feeds are crucial for regulatory bodies to process and consolidate bid and ask quotes and trades from all US exchanges.
The recent series of glitches comes shortly after US stock exchanges transitioned to a one-day settlement period. This change, known as T+1, aims to streamline trading processes but has introduced new challenges for trading infrastructure.
In January 2023, a similar error at the NYSE’s backup data center in Chicago caused wild price swings for hundreds of stocks due to a staff error. Dave Lutz, head of ETFs at JonesTrading, noted that while these disruptions might be coincidental, they are causing significant confusion among traders.
