Tried to buy the dip after the Berkshire Hathaway glitch? Be ready ...

By Joseph Adinolfi

Here's why any trades on Monday's NYSE glitch will likely be reversed

Many investors apparently tried to pounce on the opportunity to buy Berkshire Hathaway's Class A shares at a discount of more than 99% on Monday, according to FactSet data.

But even if some traders managed to get their orders filled before activity was halted, it's likely they won't be able to keep the shares, according to officials at two Wall Street trading firms.

Joe Saluzzi, co-founder of Themis Trading, told MarketWatch that the trades that triggered Monday's eyebrow-raising decline almost definitely won't hold due to the exchange's policy on "clearly erroneous transactions," which allows market makers to contest trades they believe were the result of a glitch.

"These are definitely going to be busted," Saluzzi told MarketWatch during a phone interview on Monday. "They are so far away from the mark."

Jonathan Corpina, senior managing partner at Meridian Equity Partners, agreed. Some trades appeared to be executed at the seemingly erroneous prices - which is what triggered the trading halt on Monday - and Corpina also expects them to ultimately be reversed.

Berkshire (BRK.A), Bank of Montreal (CA:BMO), Barrick Gold (CA:ABX) and a handful of other stocks were halted by the New York Stock Exchange for volatility Monday morning after showing steep declines. Berkshire shares were shown falling 99.97% to $185.10, compared with $627,400 at Friday's close, according to FactSet data. They were halted at 9:50 a.m. Eastern time, according to NYSE's website.

Hypothetically, this would have cut Berkshire's market capitalization nearly in half - to $536.3 billion at around 11 a.m. Eastern time on Monday, compared with $897.1 billion as of Friday's close, according to Dow Jones Market Data.

Trading in Berkshire's Class B shares (BRK.B) was unaffected by the glitch.

In a statement published online, the NYSE said that it was investigating a "technical issue" related to its "limit-up, limit-down bands," a fail-safe system instituted to automatically halt trading if a stock or index surpasses certain volatility limits. Later, the exchange said the issue was rooted in industrywide price bands published by the Consolidated Tape Association's securities information processor.

All halted securities have since started trading again, according to the NYSE.

Representatives for Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, didn't respond to a request from MarketWatch seeking comment.

Monday's incident was reminiscent of a trading glitch that occurred in January 2023, when issues with the NYSE's opening auction led to trades in more than 250 securities being filled at erroneous prices. At the time, the exchange said those trades would not be honored.

-Joseph Adinolfi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-03-24 1301ET