On Tuesday, the New York Stock Exchange experienced significant price fluctuations and trading halts due to a failure by a staff member at a data center to properly shut down a disaster recovery system, as reported by Bloomberg.
When trading commenced on the NYSE that morning, shares of over 250 companies exhibited erratic behavior, with some experiencing price shifts exceeding 25 percentage points. This disruption compelled the exchange to cancel thousands of trades.
Initially, the NYSE attributed the volatility to a “technical issue,” which created panic among investors. However, Bloomberg later revealed that the root cause was human error. A staff member at the exchange’s backup data center in Chicago neglected to shut down the disaster recovery system overnight on Monday. As a result, the exchange’s system interpreted the opening bell on Tuesday as a continuation of trading, bypassing the opening auctions that establish initial prices.
This caused orders to be placed at unusual prices, triggering the NYSE’s circuit breakers, which are designed to mitigate extreme price swings.