The New York Stock Exchange has agreed to pay a $9 million civil penalty to the U.S. Securities and Exchange Commission to settle charges linked to a January 2023 systems error that disrupted the market opening and triggered widespread trading halts and cancelled transactions.

The settlement, announced on Friday, relates to an incident on 24 January 2023 when the exchange mistakenly ran its primary and backup trading platforms simultaneously. According to the SEC’s order, the error caused the main system to treat opening auctions for 2,824 of the 3,421 listed securities as if they had already taken place.

The failure meant the exchange did not conduct opening auctions for more than 2,800 stocks before shifting to continuous trading. The regulator said the malfunction produced market-wide disruption including price-triggered restrictions, pauses in trading and thousands of cancelled transactions.

“NYSE’s failures caused market-wide impacts, including price-triggered restrictions on trading, market-wide trading pauses in 84 of the securities and ultimately thousands of busted trades,” the SEC said in its cease-and-desist order.

Reuters reported that trading was halted in 84 stocks during the episode, and 81 of them recorded price declines of more than 10 per cent without any clear underlying news. Affected companies included ExxonMobil, McDonald's, 3M, Verizon, Walmart and Wells Fargo.

The regulator said it took the exchange 39 minutes to detect that opening auctions had not run correctly and a further 83 minutes to determine the full scale of the disruption. The SEC concluded that the exchange lacked adequate written policies and monitoring procedures for systems supporting the opening auctions.

“The obligation of national securities exchanges such as NYSE to operate in compliance with their own rules is fundamental,” the SEC said.

The exchange, which is owned by Intercontinental Exchange, agreed to settle the charges without admitting or denying the findings. The order also found that the exchange breached provisions of Regulation Systems Compliance and Integrity as well as Exchange Act requirements governing exchange rule compliance.

Intercontinental Exchange said the operator had compensated market participants and strengthened its technology and procedures after the incident. “NYSE promptly compensated affected market participants and enhanced its procedures and systems, and there has been no recurrence of the issue,” the company said in a statement.

The exchange previously paid member firms more than $5.77 million to cover trading losses linked to the disruption.

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