Thinking of Buying the Dip Post-Berkshire Hathaway Glitch? Proceed with Caution
Why Trades Following Monday’s NYSE Glitch Are Likely to Be Reversed
Monday’s NYSE glitch prompted many investors to seize the opportunity to acquire Berkshire Hathaway’s Class A shares at a staggering discount exceeding 99%, according to FactSet data.
However, even if some managed to execute orders before trading halted, it’s probable they won’t retain ownership of those shares, according to officials from two Wall Street trading firms.
The New York Stock Exchange intends to review any trades potentially affected by the glitch, as stated by a spokesperson to MarketWatch.
Moreover, Joe Saluzzi, co-founder of Themis Trading, emphasized that trades precipitating Monday’s drastic decline are expected to be voided under the exchange’s policy on “clearly erroneous transactions,” empowering market makers to challenge trades stemming from glitches.
Jonathan Corpina, senior managing partner at Meridian Equity Partners, shares this sentiment, foreseeing a reversal of trades executed at incorrect prices.
Berkshire BRK.A, +0.59%, Bank of Montreal BMO, -0.22%, Barrick Gold ABX, +2.19%, and 37 other stocks were subject to halts for volatility by New York Stock Exchange group exchanges on Monday, following significant declines, according to a statement from a New York Stock Exchange spokesperson. Berkshire shares plunged to 99.97% to $185.10, compared to $627,400 on Friday, before being halted at 9:50 a.m. Eastern time.
In theory, this would have nearly halved Berkshire’s market capitalization to $536.3 billion by around 11 a.m. Eastern time on Monday, compared to $897.1 billion on Friday, according to Dow Jones Market Data. Trading in Berkshire’s Class B shares BRK.B remained unaffected.
Trading in all affected stocks resumed shortly before noon. The glitch stemmed from a technical issue with industry-wide price bands published by the Consolidated Trade Association’s Securities Information Processor, triggering “limit-up/limit-down” trading halts soon after Monday’s market opening, according to the NYSE spokesperson.
Monday’s incident echoed a trading glitch in January 2023, where NYSE’s opening auction issues led to trades in over 250 securities being filled at incorrect prices. At that time, the exchange stated that those trades wouldn’t be honored.
