Stock Exchange Pays $9M Fine After Computer Error Crashes Market Opening

The New York Stock Exchange will pay $9 million to settle federal charges over a January 2023 computer malfunction that caused major stock price swings and trading halts. The technical error affected nearly 3,000 securities and forced the exchange to cancel over 4,000 trades.

The New York Stock Exchange has reached a $9 million settlement with federal regulators following a major computer malfunction that caused chaos during market opening in early 2023.

The Securities and Exchange Commission announced Friday that the fine resolves charges related to a technical failure on January 24, 2023, when NYSE accidentally operated both its main trading platform and backup system at the same time.

The computer error fooled the primary system into believing that opening auctions had already taken place for 2,824 of the exchange’s 3,421 listed companies at that time, according to regulators.

The malfunction triggered trading suspensions for 84 stocks, with 81 of those securities experiencing unexplained price drops exceeding 10%. More than 4,000 trades had to be canceled as a result.

Major corporations caught up in the technical snafu included ExxonMobil, McDonald’s, 3M, Verizon, Walmart and Wells Fargo.

Federal regulators said it took NYSE officials 39 minutes to discover the problem with opening auctions and an additional 44 minutes to fully understand the extent of the disruption.

The SEC determined that the exchange lacked proper written protocols and procedures to handle the auction process. NYSE compensated member firms more than $5.77 million for losses from the incident.

Intercontinental Exchange, the Atlanta-based parent company of NYSE, issued a statement saying it has improved its systems and procedures since the incident. The company maintained that “NYSE opening and closing auctions continue to be the most reliable liquidity event for NYSE-listed symbols.”