Brokerage firms including Charles Schwab, Robin Hood, Virtu Financial and Citadel Securities have submitted claims that are believed to be over $20 million for the losses incurred due to a trading glitch on the New York Stock Exchange.
On 24 January, the regular opening auction on the exchange did not occur as normal, causing wild price swings that affected over 250 stocks.
The moves, which added or wiped out billions of dollars of market value, led the exchange to halt trading in just over 80 different shares.
Stock exchanges have built-in “circuit breakers” that automatically pause trading if a stock price suddenly swings by a large amount.
Once trading resumed, the companies’ share prices moved more or less in line with a typical trading day.
The NYSE, which is owned by the Intercontinental Exchange, attributed the problems to a malfunction in its system at a crucial time for the financial markets.
Typically, the exchange holds an opening auction at the start of trading day, collecting orders from buyers and sellers to set the opening price of individual stocks.
The exact cost of the fallout is unclear, but some industry experts believe that it could be in the eight-figure range for brokers and retail traders.
The view is that individual investors will be the likely losers from the technical glitch, as they stand to recoup just a fraction of their losses, if anything, under the NYSE liability rules.
It is also unclear as to how much is available in the pot to cover the losses. The ultimate decision will be made by an internal panel at NYSE that determines, on a case-by-case basis, what adjustments will be made, if any, for trades submitted for recovery of losses.
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