By Jonathan Stempel
NEW YORK, March 6 (Reuters) – The New York Stock Exchange has agreed to pay a $9 million civil fine to settle U.S. Securities and Exchange Commission charges over a computer glitch that disrupted the stock market open in January 2023, causing wild swings in the prices of blue-chip stocks.
Friday’s settlement stemmed from a January 24, 2023, incident where the NYSE ran its primary and backup trading systems Pillar Production and Pillar DR — short for “disaster recovery” — simultaneously by mistake.
The SEC said the inadvertent error caused the primary system to mistakenly treat opening auctions for 2,824 of the NYSE’s 3,421 listed securities at the time as having already occurred.
This led to trading halts for 84 stocks, including 81 whose prices fell more than 10% without any obvious explanation, and more than 4,000 undone, or “busted”, trades.
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Stocks affected by the glitch included ExxonMobil, McDonald’s, 3M, Verizon, Walmart and Wells Fargo.
According to the SEC, the NYSE needed 39 minutes to realize it botched the opening auctions and 83 minutes to recognize the scope of damage.
This allegedly reflected the exchange’s lack of written policies and procedures to support the auctions. The NYSE paid member companies more than $5.77 million for trading losses.
In a statement, Atlanta-based Intercontinental Exchange said it has enhanced its procedures and systems, and that “NYSE opening and closing auctions continue to be the most reliable liquidity event for NYSE-listed symbols.”
(Reporting by Jonathan Stempel in New York; Editing by Hugh Lawson)