NYSE Arca, an equities and options exchange owned and operated by the Intercontinental Exchange (ICE), suffered a technical glitch earlier this week, effectively stifling the closing auction for upwards of 341 securities.
Glitches at exchanges are nothing new and periodically shut down or inhibit operations at a number of worldwide venues. Back in December 2016, NYSE Arca experienced a technical glitch on its platform that led to a fifteen-minute cessation of trading.
This week’s technical difficulties occurred on Monday, affecting NYSE Arca’s auction mechanism. They were attributed to a new version of software. The auction mechanism is used to determine prices for a wide range of instruments, from mutual fund and exchange-traded-funds (ETF) net asset values to the valuation of benchmark indices, thus making it a critical part of daily market activity.
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Trading on the exchange has since returned to normalcy, however a letter was issued recently explaining the situation: “I am contacting you personally to emphasise that we take these matters very seriously,” Stacey Cunningham, chief operating officer at the New York Stock Exchange, wrote in the letter.
Approximately 341 securities were affected, though NYSE is not making a full list of affected securities publicly available. The bigger revelation may be how reliant trading platforms have become on technology, with periodic hiccups or software glitches becoming a norm for global exchanges.
These issues are exacerbated by periodic updates and other mechanisms that ultimately traders have had to adapt to. This week’s glitch affected the closing prices for ETFs, though NYSE utilized an alternative mechanism to determine closing prices for the affected securities – trading has since resumed, though US regulators have already been looking into previous glitches at NYSE and ICE’s handling of past situations.