The New York Stock Exchange experienced a technical glitch on Tuesday morning that briefly halted trading for dozens of major companies just after the market opened. As a result of the problem, some trades that took place before the halt will be “null and void,” according to an exchange representative.
In all, more than 250 stocks were affected, including big names like Verizon, McDonald’s, Morgan Stanley, AT&T, Nike, Mastercard, Uber, Wells Fargo, Shell, 3M, Sony, UPS, Visa, Walmart and Exxon Mobil. according to NISE.
Many of those stocks made big moves just minutes into the morning trading session, sending shares of companies such as Wells Fargo and Morgan Stanley down.
Morgan Stanley briefly fell to $84.93 after finishing at $97.13 on Monday before recovering. McDonald’s and Walmart also fell more than 12% before trading was halted.
By 9:50 a.m. ET on Tuesday, all affected companies on the NISE had resumed trading, according to a NISE status report that said “all systems are currently operational.”
Stocks typically open for trading on the NISE at 9:30 a.m. ET, and each stock is given an “opening price” determined by the thousands of orders accumulated overnight and early in the morning before the opening bell. The exchange compiles these buy and sell orders and forms a single price. That price is then quoted in the open and is known as the “auction print”.
In an emailed statement, exchange officials said opening auctions “did not occur” for a number of these stocks, after a “systemic issue” prevented accumulated orders from being compiled into the opening price of some stocks on Tuesday.
That meant those stocks opened with supply-demand imbalances at prices far removed from where they closed on Monday.
The exchange said trades made before the initial price was printed would be reviewed as “manifestly erroneous” under its rules and could be declared void.
NISE did not explain the cause of the technical error. The U.S. Securities and Exchange Commission also said Tuesday it was looking into the matter.
The NISE, and most other major exchanges, issue automatic stops for stocks that move dramatically up and down.
In May 2010, the Dow fell during a “flash crash”, before recovering dramatically. A report by US regulators later stated that the huge swing was the result of high-frequency trading activity following a massive trade by one market participant. That prompted a number of regulatory changes aimed at protecting equity markets, including a “limit up-limit down” mechanism that prevents trading of individual stocks from moving beyond a certain price range.
But exchange officials can also halt trading when there is a technical problem. Last fall, three Canadian exchanges suffered a 40-minute outage due to “connection issues,” before the exchange was able to isolate and fix the problem.