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Bad Software Update Triggers Apparent 9.6% Plunge in NYSE Euronext Arca Traded Fund

Problem fixed, but again tests investor confidence in markets

1 min read

Bad Software Update Triggers Apparent 9.6% Plunge in NYSE Euronext Arca Traded Fund

Reports are appearing in today's business press about a software upgrade that went bad in the New York Stock Exchange (NYSE) Euronext’s electronic Arca trading platform.

As reported by Bloomberg News, the problem:

"... triggered what appeared to be a 9.6 percent plunge yesterday in an exchange-traded fund that tracks the Standard & Poor’s 500 Index, a drop that would have erased $7.9 billion from one of the most popular securities in the U.S. Data published by the electronic venue at 4:15 p.m. New York time showed the SPDR S&P 500 ETF Trust at $106.46, compared with its opening level of $117.74."

According to the NYSE:

"On Monday, October 18, the 4 pm ET closing auction in NYSE Arca primary listed symbols was delayed due to an issue with a software release, causing the auction cycle to run at 4:15 pm ET. These auction prices, occurring at 4:15 pm ET, constitute the official exchange closing prices for these issues, with the exception of ‘SPY.’ All trades in the closing auction in ‘SPY,’ which occurred at a price of $106.46, were ruled to be broken by NYSE Arca Market Management. The official closing price will be marked at [4:15 pm] utilizing the valid prior print of $118.28."

The S&P index fund (SPY) affected has a market value of some $80 billion, Bloomberg says.

This latest problem comes on the heels of the report on the NYSE flash crash in May which was also traced to a software issue. Investor confidence in the stability of stock markets, which was already suffering, will not be increased by this latest problem.

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