On Monday morning, the New York Stock Exchange (NYSE) faced a significant technical glitch that caused trading halts in shares of several companies, including the highly valued Berkshire Hathaway Class A shares. This disruption was linked to a recent code upgrade implemented by the Consolidated Tape Association Security Information Processor (CTA SIP) over the weekend. The CTA SIP is a critical system responsible for consolidating stock data across major exchanges, ensuring accurate and timely information dissemination.
The root cause of the trading halt was a change in the calculation method for the opening reference price of stocks. Previously, this price was determined by the SIP itself. However, the new upgrade altered the process so that the price would be calculated by the primary listing market of the stocks. This change led to unexpected and severe price anomalies in certain securities, prompting immediate trading halts to prevent further instability.
One of the most notable impacts was on Berkshire Hathaway Class A shares, which are among the most expensive stocks traded on the exchange. Trading was halted at approximately 9:50 a.m. when the share price showed a dramatic drop of over 99%, falling to $185.10 from around $640,000. This extreme drop triggered the NYSE’s safety mechanisms designed to prevent excessive volatility.
Other affected stocks included Barrick Gold, which saw its shares plummet by more than 98%, dropping to $0.25 before trading was halted at around 9:56 a.m. Similarly, shares of NuScale Power experienced a drastic drop, falling to $0.13. These abrupt and severe price declines underscored the widespread impact of the technical glitch.
The NYSE responded swiftly to the issue, with the CTA SIP rolling back the code upgrade to its previous version. This rollback effectively resolved the glitch, allowing trading to resume for all impacted stocks by 11:40 a.m. Eastern Time. Following the resumption, Berkshire Hathaway Class A shares rebounded to around $640,000, reflecting a 2% increase from their pre-halt levels. Barrick Gold shares rose by approximately 1.7% to $17.38, while NuScale Power shares increased by 3.8% to $8.40.
This incident is the latest in a series of technical issues that have occasionally disrupted trading on major exchanges over the past couple of decades. In 2015, a significant outage halted trading at the NYSE for nearly four hours, and in 2013, trading on the Nasdaq was suspended for three hours due to problems with the information feed used for stock quotes. Perhaps most famously, the 2010 “flash crash” saw major exchanges experience a sudden collapse and rebound, which market regulators attributed to automated trading following the sale of a large number of S&P 500 futures contracts.
These incidents highlight the ongoing challenges and vulnerabilities inherent in the complex infrastructure of modern financial markets. Despite numerous improvements and safeguards, the reliance on sophisticated technology and automated systems means that occasional disruptions remain a possibility.
The NYSE, owned by Intercontinental Exchange, continues to investigate the specific causes and mechanisms behind Monday’s glitch. The exchange had initially reported that the issue related to the Limit Up-Limit Down (LULD) bands, which are intended to prevent extreme price swings by stopping trades that occur outside predefined price bands. Ensuring the stability and reliability of these systems is crucial for maintaining investor confidence and the smooth functioning of financial markets.
As the situation evolves, market participants and regulators alike will be closely examining the events of Monday morning to identify lessons and improvements that can help mitigate the risk of similar issues in the future.