Traders Say Disruptions Minimal During S&P 500 Pricing Glitch

Traders Say Disruptions Minimal During S&P 500 Pricing Glitch

(Bloomberg) — Live pricing for the biggest US equity index did not print for almost 80 minutes Thursday morning, though individual stock quotes continued normally, minimizing disruptions for traders.

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Pricing for the S&P 500 Index stopped printing at 10:41 a.m. in New York, owing to a problem with the dissemination of data, according to S&P Dow Jones Indices. Pricing resumed just before noon. The Dow Jones Industrial Average suffered the same problem, though it resumed a few minutes earlier. The S&P 500 was down 0.3% as of 12:41 p.m.

Individual stocks and exchange-traded funds, including the largest ETF that tracks the S&P 500, continued to print normally throughout. That, along with trading of S&P 500 futures contracts, helped traders navigate the disruption, with traders describing the outage as adding to their workload, though not particularly problematic.

“There’s enough data sources out there to calculate where the S&P 500 is trading,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. “If all the stocks in the index are still trading, you generally know where the index is, you just may have to be wider until the data issue solved.”

Roughly $16 trillion in assets track the S&P 500, according to data compiled by Bloomberg Intelligence.

While the glitch wasn’t a welcome development, it didn’t affect broader trading, according to Steve Sosnick, chief strategist at Interactive Brokers LLC.

Traders could switch to instruments like ETFs or futures to track the market, he said. Those who needed precise calculations to trade products connected to the S&P 500 were able to do the calculation themselves because trading in individual stocks in the S&P 500 Index was unimpeded.

The S&P 500 primary benchmark for US equity markets, with hundreds of products based on its calculation, from the index itself to the Cboe Volatility Index, futures and options contracts. The main S&P 500 ETFs, the SPDR S&P 500 (ticker SPY) and the Vanguard S&P 500 ETF (ticker VOO), have a combined market value of almost $1 trillion.

S&P Dow Jones Indices said in a statement that there was an “issue impacting the dissemination of S&P Dow Jones Indices real-time index values” for the time period. The index operator said the issue was been resolved and real-time values for the indexes are now being disseminated normally.

“We are continuing to investigate the root cause of the outage,” a spokeswoman for S&P Dow Jones Indices said by phone.

Jonathan Corpin, senior managing partner at Meridian Equity Partners who works on the floor of the New York Stock Exchange, said all his clients were able to execute trades during the outage, but the firm had to put in extra effort.

“When something like this happens, it becomes a much more tedious process to figure out what the fair value is for the S&P 500 when trying to compute the underlying value of all of the individual stocks,” he said. “That’s a pretty big task.”

CME Group Inc., the derivatives exchange that has an interest in the Dow index, confirmed that no index pricing for the Dow Jones and the S&P 500 was being generated during that time, according to CNBC.

Dave Mazza, CEO at Roundhill Investments, said his firm tends to trade around the close so it wasn’t bothered by the incident.

“It isn’t that significant in the grand scheme as individual stocks, index futures and S&P 500 ETFs continued to trade normally,” he said. “It can cause the potential for mispricings or misquoting. It’s more of a wake up that traders especially need redundancies in their data feeds or sources since we take so much for granted in a digital age.”

–With assistance from Alexandra Semenova.

(Updates to add additional reaction and latest developments.)

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