SIMCEL ONLINE

On June 3, 2024, the New York Stock Exchange (NYSE) experienced a technical issue that briefly caused a significant disruption in the trading of some major stocks, including Berkshire Hathaway. The glitch resulted in Berkshire Hathaway’s Class A shares being erroneously listed as trading at just $185.10 — a staggering 99.97% drop from its previous closing price of $627,400 on Friday. Fortunately, the NYSE quickly identified and resolved the issue, but not before causing a temporary panic among investors.

What Happened?
According to CNN Business, the NYSE reported that the technical issue was related to a mechanism designed to prevent stock prices from swinging wildly. This mechanism, known as price bands, is intended to halt trading when stocks move outside pre-set limits. However, a malfunction in these price bands triggered trading halts on up to 40 symbols listed on NYSE Group exchanges.

The root cause of the problem was traced back to the Consolidated Tape Association’s (CTA) Security Information Processor (SIP), which publishes real-time trade and quote data. The CTA experienced an issue that “may have been related to a new software release.” To mitigate the issue, the industry group reverted to a secondary data center operating on an older version of the software.

Immediate Impact
The technical glitch caused dozens of stocks to be paused earlier in the day as they traded outside the so-called limit up-limit down bands. Among the affected stocks were high-profile names like Chipotle and Berkshire Hathaway. For nearly two hours, Berkshire Hathaway’s shares were displayed at a drastically reduced price, leading to confusion and concern among investors.

Joe Saluzzi, co-founder of Themis Trading, expressed skepticism about the NYSE’s explanation, stating, “I’m not buying that explanation. That doesn’t make any sense to me.” Saluzzi pointed out that the trading data showed an abrupt drop to $185.10 without the gradual decline one might expect.

Resolution
The NYSE announced that it had decided to “bust,” or cancel, all erroneous trades for Berkshire Hathaway that occurred between 9:50 am ET and 9:51 am ET at or below $603,718.30. This decision is not subject to appeal. The exchange also indicated that it might cancel other trades if necessary.

Despite the glitch, the broader stock market remained largely unaffected, moving mostly lower on economic growth concerns. By midday, impacted stocks like Barrick Gold and NuScale Power returned to normal trading levels.

Conclusion
While the NYSE’s technical issue was quickly resolved, it served as a stark reminder of the vulnerabilities in the modern stock trading infrastructure. The incident highlighted the importance of robust systems and quick response mechanisms to maintain investor confidence and market stability.

For further details on the incident, visit CNN Business