On Monday 3 June, NYSE Equities confirmed that it was investigating a technical issue which had caused stocks to drop unexpectedly, subsequently drawing wide-ranging attention from the market.
All impacted stocks reopened by 4.40pm with all systems operational. The investigation specifically concerned Limit-Up-Limit Down Bands (LULD), designed to “mitigate extraordinary market volatility and extreme price movements in individual securities.”
Speaking to the specifics, the exchange confirmed that the technical issue was related to the industry-wide price bands published by the CTA SIP which triggered halts in a number of stocks listed on the NYSE Group exchanges yesterday morning.
The LULD halts happened between 9.30am and 10.27am.
Read more: Tech glitches should not be the cause of stock exchange outages in this day and age
The New York Stock Exchange (NYSE) confirmed late on Monday that, along with other UTP equities exchanges, it was currently reviewing potentially erroneous trades related to 40 stocks, advising customers to “review their activity for potentially erroneous trades”.
The 40 stocks currently being reviewed include big names such as: Warren Buffett’s Berkshire Hathaway (BRK A), Canada’s Bank of Montreal (BMO), International restaurant chain, Chipotle (CMG), and the notorious GameStop Corporation (GME).
In an update the NYSE confirmed: “We are currently evaluating which LULD halts were erroneous (i.e., caused by erroneous bands published by the CTA SIP) versus correct halts resulting from correct price bands.
“Halts determined to have been caused by erroneous bands will be considered for potential busts,” said the NYSE.”
So far, the NYSE in conjunction with other UTP exchanges ruled to bust all erroneous trades in Berkshire Hathaway Inc. (BRK A) from 9:50am – 9.51am at or below $603,718.30.
Speaking to The TRADE about the impact of the technical glitch, Sylvain Thieullent, chief executive at Horizon Trading Solutions, asserted that these issues should already be a thing of the past.
“Market participants are left asking again, why do they keep happening? Just last year the NYSE had to cancel trades after its opening auction triggered significant price swings, ultimately put down to human error.
“[…] If one thing fails or one piece of information is missed, it can affect thousands of other pieces of equipment. As the glitch yesterday and others have shown, it’s not as simple as flipping a switch to get things operational again. The focus now must be on upgrading existing technology and processes, and incorporating necessary functionalities so that exchanges are as prepared as possible the next time another NYSE-type incident occurs.”