The New York Stock Exchange was forced to halt more than 200 stocks in early trading Tuesday in what was previously said to be a technical error. As it turns out, someone just fat fingered a switch.
What Happened: According to a Bloomberg TV report, the chaos has been traced back to an employee who accidentally left a backup system running at the NYSE.
The system helps to prevent disasters, but in an ironic turn of events, it ended up being the cause of Tuesday's mayhem. The backup system is supposed to be shut off and then turned back on regularly, but an employee accidentally failed to shut down the system prior to the open.
"The NYSE main system thinks that trading has just been running, so come 9:30, it just treats it like an extension of the trading day," Bloomberg's Dani Burger said Thursday morning on Bloomberg TV.
As a result, massive amounts of liquidity didn't register, so anyone placing orders while the backup system was running was trading in an extremely illiquid market, Burger said.
"Even if you just trade, let's say 500 shares, it can mean that prices swing really wildly and ultimately the result is you perhaps lost or even made a lot of money," she said.
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Several trades have been canceled and there may be financial repercussions. The exchange sets aside about $500,000 per month to deal with different problems, but it's likely that it never anticipated one quite like this.
Uber Technologies Inc UBER, McDonald's Corp MCD, Nike Inc NKE and Morgan Stanley MS were among the stocks impacted on Tuesday. The SPDR S&P 500 SPY was highly volatile throughout the first half hour of trading as traders scrambled to figure out what was going on.
From Tuesday: NYSE Technical Glitch Leads To Stock Halts In Uber, AT&T, Others: What We Know So Far
Photo: David Vives from Pixabay.
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