SEC Fines NYSE $9 Million Over January 2023 Trading Glitch
The New York Stock Exchange agreed today to pay a $9 million fine over a 2023 computer glitch. This error disrupted thousands of trades for listed securities.
The United States Securities and Exchange Commission has imposed a $9 million civil fine on the New York Stock Exchange (NYSE) to settle charges stemming from a technical failure that disrupted markets in early 2023. The incident, which took place on January 24, 2023, led to erratic price movements for a wide range of blue-chip stocks and forced the cancellation of thousands of trades.
The disruption occurred when the exchange inadvertently operated its primary trading system and its disaster recovery backup system simultaneously. This error caused the primary system to bypass opening auctions for 2,824 securities, mistakenly treating them as if they had already occurred. The resulting chaos led to 84 trading halts and more than 4,000 \"busted\" trades.
Among the companies impacted by the sudden price swings were Verizon Communications Inc. and Walmart Inc., along with other major entities such as ExxonMobil, McDonald’s, and 3M. In some instances, stock prices dropped by more than 10% without any clear market catalyst.
The SEC's investigation revealed that the exchange lacked the necessary written policies and procedures to address such a failure. Regulators noted that it took 39 minutes for the exchange to identify the botched auctions and 83 minutes to understand the full scale of the market impact. Following the event, the exchange paid more than $5.77 million to member firms to compensate for trading losses.
Intercontinental Exchange, the parent company of the NYSE, stated that it has since enhanced its procedures and systems to prevent a recurrence.
\"NYSE opening and closing auctions continue to be the most reliable liquidity event for NYSE-listed symbols.\"
