Why Trades Linked to Monday’s NYSE Glitch Are Expected to be Reversed
Amid Monday’s NYSE glitch, numerous investors sought to capitalize on the opportunity to snag Berkshire Hathaway’s Class A shares at an over 99% discount, as per FactSet data.
However, even if some managed to secure orders before trading halted, chances are they won’t retain those shares, as indicated by officials from two Wall Street trading firms.
The New York Stock Exchange plans to scrutinize any trades potentially affected by the glitch, as conveyed by a spokesperson to MarketWatch.
Additionally, Joe Saluzzi, co-founder of Themis Trading, emphasized that trades sparking Monday’s startling drop are likely to be annulled under the exchange’s policy on “clearly erroneous transactions,” empowering market makers to contest glitch-induced trades.
Jonathan Corpina, senior managing partner at Meridian Equity Partners, shares this sentiment, anticipating a reversal of trades executed at erroneous prices.
Berkshire BRK.A, +0.59%, Bank of Montreal BMO, -0.22%, Barrick Gold ABX, +2.19%, and 37 other stocks witnessed halts for volatility by New York Stock Exchange group exchanges on Monday, after registering steep declines, as per a statement from a New York Stock Exchange spokesperson. Berkshire shares plummeted to 99.97% to $185.10, compared to $627,400 on Friday, before being halted at 9:50 a.m. Eastern time.
Hypothetically, this would have nearly halved Berkshire’s market capitalization to $536.3 billion by around 11 a.m. Eastern time on Monday, compared to $897.1 billion on Friday, based on Dow Jones Market Data. Trading in Berkshire’s Class B shares BRK.B remained unaffected.
Trading in all affected names resumed shortly before noon. The glitch stemmed from a technical issue with industry-wide price bands published by the Consolidated Trade Association’s Securities Information Processor, triggering “limit-up/limit-down” trading halts soon after Monday’s market opening, according to the NYSE spokesperson.
Monday’s incident echoed a trading glitch in January 2023, where NYSE’s opening auction issues led to trades in over 250 securities being filled at incorrect prices. At that time, the exchange stated that those trades wouldn’t be honored.
