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NYSE Blames Software Bug for Berkshire Hathaway Price Crash, Cancels “Erroneous” Trades

Last Updated June 4, 2024 1:38 PM
James Morales
Last Updated June 4, 2024 1:38 PM

Key Takeaways

  • On Monday, a software bug caused Class A Berkshire Hathaway shares to be listed for a fraction of their actual value.
  • The New York Stock Exchange (NYSE) has reversed trades based on erroneous price data.
  • Critics have argued that the incident highlights the weakness of centralized systems.

The price of shares in Berkshire Hathaway and several other companies listed on the New York Stock Exchange (NYSE) appeared to crash by over 99% on Monday morning.

However, after the exchange identified a software malfunction that appeared to cause inaccurate price reporting, trades made at a significant discount were reversed.

Price Reporting Software Fails

In a statement  on Monday, Consolidated Tape Association (CTA) acknowledged a problem with the Security Information Processor (SIP) that NYSE and uses to consolidate trading data.

Noting that the glitch “may have been related to a new software release,” the CTA responded to the anomalous price data by reverting to a previous version of the software.  

According to the NYSE website , trading for dozens of securities was paused on Monday as they fell outside of set price bands. Affected stocks include Class A Berkshire Hathaway shares, which were briefly listed for $185.10, having closed Friday at $627,400.

Erroneous Trades Cancelled

NYSE trading rules allow the exchange to nullify “clearly erroneous” transactions, a clause it invoked on Monday afternoon when it announced that all Berkshire Hathaway trades at or below $603,718.3 would be canceled.

Other stocks that were affected include the mining conglomerate Barrick Gold, which was briefly listed at just $0.25 per share, down from $17.08 on Friday. Meanwhile, nuclear energy technology firm NuScale Power exchanged hands for $0.13 a share, down 98.5% from its normal trading price.

After trading for the affected securities was suspended, normal activity resumed within an hour. 

Exchanges Undermined by Technical Glitches

Monday’s issues highlight how even the most structurally important securities exchanges can still be subject to technical failures.

Last week, the S&P 500 and the Dow Jones Industrial Average data feeds provided by the Chicago Mercantile Exchange (CME) went down  for an hour. In December, an error  affecting Nasdaq’s order-handling system caused delays and canceled orders for around 50 stocks.

Responding to Monday’s NYSE failure, ChainLink argued that it demonstrated the advantages of integrating blockchain technology into the financial system.

Highlighting the danger such incidents pose to market integrity, the company called for a new system “backed by decentralized infrastructure that eliminates single points of failure and reduces systemic risk across the global economy.”

Meanwhile, Edward Snowden responded to the news by simply stating  that “Bitcoin fixes this.”

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