(Bloomberg) -- A glitch during a software update early Monday led the New York Stock Exchange to mistakenly halt trading in about 40 stocks and display strange trades that showed a 99% drop in companies like Berkshire. Warren Buffett's Hathaway Inc.
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The outage, the third episode to hit U.S. markets last week, was resolved after about 45 minutes when the Consolidated Tape Association, whose systems are operated by a subsidiary of the New York Stock Exchange, returned to a data center in backup that runs a different software version.
NYSE said it will cancel bad trades at Berkshire Hathaway and is reviewing the erroneous suspensions to determine whether to cancel any of them.
The forced pauses, which began shortly before 9:45 a.m. in New York, came as the CTA was implementing a change to the software that governs what opening prices are displayed in the Securities Information Processor, or the feed that Consolidates bid and ask quotes made on various exchanges.
About a dozen trades in Berkshire Class A shares soared to $185.10 around 9:50 a.m. The stock closed Friday at $627,400. The NYSE said any trade between 9:50 and 9:51 worth $603,718.30 or less will be canceled. NuScale Power Corp. had a similar problem, with trades printing about 99% below the previous price.
The sudden disruption did not affect stocks listed on Nasdsaq and had minimal impact on the broader market, although it came as the trading infrastructure adapts to one-day settlements from two, known as T+1. A technical issue on Thursday left the S&P 500 index without live prices for more than an hour. Two days earlier, an exchange had issues interacting with the data broadcast feed.
"A little strange, but almost certainly a coincidence," Steve Sosnick, chief strategist at Interactive Brokers LLC, said of the NYSE's issuance after last week's S&P 500 index technical issue. "We've become accustomed to a lot of uneventful uptime on the exchange, so when a couple of failures occur in a row, it's notable."
"My guess is those bad trades will be written off," said Jonathan Corpina, senior managing partner at Meridian Equity Partners, who normally works on the New York Stock Exchange. โI'm more curious to know how this happened. โI understand what happened, but I want to understand how.โ
Limit up and limit trading bands generally govern when stocks stop for volatility. The SIP is a single data source where regulators process and consolidate offers and requests for quotes and trades from all US exchanges.
Stock trading in the US is executed on more than a dozen exchanges, and all buy and sell orders are consolidated into data feeds that are distributed around the world. NYSE, which is owned and operated by Intercontinental Exchange Inc., operates multiple exchanges, including NYSE Arca and NYSE American.
The company consolidates order data from multiple exchanges into the Consolidated Tape Association. Together, they constitute Tapes A and B. Nasdaq Inc., owner of the Nasdaq exchanges, operates a separate consolidated feed known as Tape C. Volumes on the US exchanges are calculated by adding the three tapes.
The outages recall a confusing episode in January 2023, when an employee at the New York Stock Exchange's backup data center in Chicago left a backup system running in an error that caused wild price swings for hundreds of stocks when it opened the market.
โWhether a coincidence or not, it is certainly causing a lot of confusion on the street during the second session of the last three,โ Dave Lutz, head of ETFs at JonesTrading, said in a message.
Read more: How the new 'T+1' rule liquidates US stocks in one day: QuickTake
--With the help of Carly Wanna and Carmen Reinicke.
(Updates to add additional details and comments throughout.)
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