The U.S. Securities and Exchange Commission (SEC) announced settled charges against the New York Stock Exchange LLC (NYSE), imposing a civil penalty of $9 million. The penalty stems from a January 2023 incident in which NYSE failed to conduct opening auctions for more than 2,800 securities.
According to the SEC's order, the disruption occurred on January 24, 2023, when NYSE inadvertently ran its primary and backup trading systems simultaneously. This caused the primary system to incorrectly treat the opening auctions for thousands of securities as already completed, resulting in the auctions not being run.
The SEC found that NYSE lacked written policies and procedures to monitor whether opening auctions had occurred. The exchange was unaware of the full scope of the issue for nearly 90 minutes after trading began. The failure led to market-wide impacts, including price-triggered restrictions, trading pauses in 84 securities, and thousands of canceled trades.
The SEC concluded that NYSE violated Rule 1001(a)(2)(vii) of Regulation Systems Compliance and Integrity (Regulation SCI) and Section 19(g)(1) of the Exchange Act, which requires exchanges to comply with their own rules. Without admitting or denying the findings, NYSE agreed to a cease-and-desist order in addition to the $9 million penalty.
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