An uproar at the New York Stock Exchange yesterday demonstrated that traditional market systems can still be prone to failure or manipulation.
According to the NYSE, a “systems issue” effectively negated the initial sale for hundreds of securities, triggering a widespread trading halt. The glitch affected trading of more than 250 securities, causing confusion over whether orders were being filled at the correct prices. These included shares of some major corporations including ExxonMobil, 3M, Verizon, McDonald’s Corp, Wells Fargo and Walmart.
An investor explained that his initial orders on the NYSE were automatically canceled due to the error, even though he intended to execute them. According to the stock exchange, the shares started trading “without any opening print”, showing false prices. The exchange said it would declare the false price points null and void and cancel the resulting trades.
NYSE glitch fallout
The exchange was able to salvage the rest of the day, which ended with a normal market close. Although the NYSE said it would investigate the incident, the cause of the disturbance is still unclear. However, early estimates of how much it will cost investors are in the eight figures.
The US Securities and Exchange Commission said it would investigate the matter. In 2014, the SEC introduced a set of rules regarding business continuity, under which it fined the NYSE $14 million in 2018. In July 2015 the exchange became the first fine under the regime for a four-hour break in trading.
system error
The incident shows that even as crypto skeptics scrutinize blockchain protocols and decentralized finance, even traditional financial systems are flawed. According to him, even when the crypto markets are up, it can only result in manipulation.
However, despite its growing pains, blockchain technology was designed in part to address the flaws in the financial infrastructure. For example, trading platform Robinhood suspended trading of popular meme shares last year, which many traders decried as manipulation. A decentralized exchange governed by smart contracts would be unable to make such arbitrary decisions affecting investors.
disclaimer
BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.