Investing / Stocks

NYSE Will Pay Back Investors Who Suffered Losses After Last Month’s Trading Glitch

Wall Street Sign with Arrow Pointing towards 11 Wall Street where New York Stock Exchange is, Lower Manhattan Financial District, NY, USA.

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Investors who lost money during last month’s glitch on the New York Stock Exchange just got some good news: The exchange will you pay back — as long your trades meet the right set of parameters. Otherwise, you might have to swallow the losses.

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The exchange recently told clients that it plans to cover losses that were either posted or routed to the NYSE, Bloomberg reported, citing unnamed sources. However, trades that triggered losses on other trading venues will not be covered. Sources told Bloomberg that the NYSE will only reimburse about 60% of the claims filed.

The reimbursement will be in the single-digit millions — much higher than the $500,000 that NYSE sets aside each month to cover disruptions. The exchange might also have to seek permission from regulators to cover losses that exceed that pool.

“In accordance with our rules, we expect to reimburse members 100% for all impacted orders that were received by the exchange,” a NYSE spokesperson said in a Feb. 6 emailed statement. “This is part of the protections that come with trading on a transparent, public exchange.”

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The glitch, which occurred on Jan. 24, 2023, was caused by human error. It wound up canceling thousands of trades that affected hundreds of securities. Those affected included corporate heavyweights such as Wells Fargo, McDonald’s, Walmart and Morgan Stanley. In some cases, the malfunction caused swings of 25 percentage points between high and low prices in only a matter of minutes.

Claims to recoup losses reportedly came from a number of retail brokerages — including Charles Schwab and Robinhood Markets — as well as market makers Virtu Financial and Citadel Securities.

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The NYSE was given until the end of January to evaluate the losses and determine how much it would pay. Investors who don’t qualify for repayment will have to absorb the losses, even on trades on other exchanges that were triggered by erroneous NYSE prices. However, some of those left out might be able to appeal the NYSE’s decision.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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