NYSE ARCA SUF­FERS GLITCH

Only 53 of 1,230 se­cu­ri­ties closed through nor­mal auc­tion-driven method on Mon­day

New Straits Times - - Business -

NYSE Group sowed con­fu­sion among traders af­ter a tech­ni­cal er­ror hob­bled one of its ex­changes on Mon­day.

NYSE Arca, the largest United States list­ing venue for ex­change-traded funds, shifted to backup meth­ods for cal­cu­lat­ing the clos­ing prices for most se­cu­ri­ties, ac­cord­ing to a se­ries of trader alerts.

How­ever, it said yes­ter­day all sys­tems were now func­tion­ing nor­mally.

While high-pro­file ex­change mal­func­tions are be­com­ing rarer in the US$27 tril­lion (RM119 tril­lion) US stock market, Mon­day’s fault high­lights the im­por­tance of clos­ing auc­tions, which have as­sumed a big­ger role with the growth of pas­sive in­vest­ing.

Out of 1,230 Arca-listed se­cu­ri­ties, only 53 were closed through the nor­mal auc­tion­driven method. Those that weren’t in­clude the US$237 bil­lion SPDR S&P 500 ETF and US$33 bil­lion SPDR Gold Shares ETF, two of the largest ex­change­traded funds in the world.

“One could ar­gue the role of NYSE of­fi­cial clos­ing prices is one of the most im­por­tant in the market,” said Spencer Mindlin, an an­a­lyst at Aite Group LLC.

“Mil­lions of port­fo­lios and re­tire­ment ac­counts de­pend on the clos­ing prices of NYSE-listed stocks and ETFs.”

Not know­ing the clos­ing price for a se­cu­rity can be a source of risk for traders, leav­ing fund man­agers un­able to ac­cu­rately tally the value of their hold­ings.

The er­ror comes as NYSE still faces fall­out from a sep­a­rate tech­ni­cal er­ror al­most two years ago.

Par­ent In­ter­con­ti­nen­tal Ex­change Inc re­vealed last month that Se­cu­ri­ties and Ex­change Com­mis­sion in­ves­ti­ga­tors believed a 3 ½-hour New York Stock Ex­change out­age on July 8, 2015, vi­o­lated the law. Bloomberg

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