NYSE Agrees to $9 Million Settlement with SEC Over Market Open Malfunction

The New York Stock Exchange (NYSE) has agreed to pay $9 million to settle allegations made by the US Securities and Exchange Commission (SEC) regarding a botched market open on January 24, 2023. The SEC alleged that an internal malfunction led to wild price swings and trading disruptions in over 84 securities.

Impact of the Malfunction

The malfunction resulted in thousands of busted trades, price-triggered restrictions on trading, and market-wide trading pauses. The affected securities included Wells Fargo & Co., McDonald’s Corp., Walmart Inc., and Morgan Stanley, with some stock prices experiencing swings of up to 25 percentage points in minutes.

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Investigation and Resolution

The SEC found that the NYSE failed to conduct an opening auction for over 2,800 securities, instead initiating continuous trading due to a "critical systems disruption". The regulator also stated that the NYSE did not establish written policies and procedures to monitor systems supporting its opening auctions.

Response from NYSE

In response to the allegations, the NYSE agreed to pay the settlement without admitting or denying the SEC's claims. Intercontinental Exchange Inc. (ICE), the parent company of NYSE, stated that the exchange promptly compensated affected market participants and enhanced its procedures and systems, with no recurrence of the issue.

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Ongoing Reliability

The NYSE continues to operate its opening and closing auctions, which remain the most reliable liquidity event for NYSE-listed symbols.