Interactive Brokers has reported a $48 million loss following a technical glitch on the New York Stock Exchange (NYSE) that led to a dramatic drop in Berkshire Hathaway shares, according to the Financial Times. The brokerage giant ended up covering its customers’ trades after the NYSE refused to offer compensation for the incident.
On June 3, a technical issue caused Berkshire Hathaway’s class A shares to plummet from $622,000 to $185 per share during early trading on the NYSE. This steep decline halted trading and triggered a wave of buy orders from Interactive Brokers’ customers, who anticipated favorable fill prices when trading resumed.
When the market reopened nearly two hours later, Berkshire’s shares surged to $741,941, resulting in orders being filled at various prices, some reaching the peak price. The NYSE decided to cancel all trades below $603,718.30 that were executed before the halt. This decision left Interactive Brokers to cover a significant portion of its customers’ trades.
Despite Interactive Brokers’ request for the NYSE to cancel these deals, the plea was denied, forcing the brokerage to financially accommodate its customers. This situation led to a substantial $48 million loss for Interactive Brokers, which serves both retail investors and professional traders, including hedge funds.
The company is now exploring legal options to recover some of the losses. They have stated that the financial impact of this incident is not material to their overall earnings.
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