An error made by an employee who forgot to turn off the system affected the stocks of more than 250 companies and led to the cancellation of thousands of deals on… New York Stock Exchange (NYSE, its abbreviation in English), last Tuesday, 24. The problem, oddly enough, occurred in the disaster recovery system.
The NYSE’s data backup center is located in Chicago, more than 1,100 kilometers from the physical headquarters, and performs a routine that includes turning systems on and off as soon as the markets close, to ensure everything works.
However, an administrator on Monday the 23rd forgot to properly close the disaster recovery system, which led to the exchange’s computers mistakenly treating Tuesday’s 9:30 a.m. opening as a continuation of the previous day’s trading.
With that, computers skipped the day’s opening auctions that set starting prices. Without the stage, offers arrived at the most varied prices.
Mechanisms designed to avoid violent market swings and alarms on trading desk screens have been activated. Shares of companies such as AT&T, Verizon and Morgan Stanley were affected. In some cases, there was a fluctuation of 25 percentage points in a matter of minutes.
Trading in several stocks was paused shortly after opening trading hours and subsequently cancelled.
The New York Stock Exchange said in a statement that it did not hold the inaugural auction for some shares due to a “system problem.” A number of deals took place before the price cap was set. Under the current rules, such trades are subject to review by the exchange operator, who may mark them as “patently false.”
In this scenario, the NYSE decided to void trades that occurred after the opening at 11:30 am (Brasilia time), but before the upper and lower limits were set. It also evaluates the deals as anomalous. The note confirms “This action will exclude these executions from calculating the maximum or minimum price for the day.”
The cost of the chaos generated is still being calculated. Market professionals and amateur traders alike are shaken, hoping the exchange will explain what it has publicly described as a “manual error” involving a “disaster recovery setup.”
The Securities and Exchange Commission (SEC, US Securities and Exchange Commission) told Estadao / Broadcasting The technical team of the regulator is reviewing the activities and is in direct contact with the stock exchange. The official who allegedly committed the error has not been identified. / with info from Estadao / Broadcasting and bloomberg
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