As reported earlier this week by MarketsMuse, a “computer glitch” suffered by market data vendor Sungard Systems has left custodian BNY Mellon still scrambling to price Net Asset Value (NAV) for nearly 10% of exchange-traded funds held by customers. Late Wednesday, BNY said 20 mutual fund companies and 26 ETF providers have experienced “some pricing problems.” According to sources, the snafu has impacted $220bil worth of assets.
According to Bloomberg news, “A technology breakdown at Bank of New York Mellon Corp., leaving it unable to price more than 10 percent of U.S. exchange-traded funds and some mutual funds, may be causing investors to overpay for them.
BNY Mellon said Thursday in a statement that it’s working “round-the-clock” to fix a technology issue at vendor SunGard Data Systems Inc. The snafu has prevented the bank from issuing net asset values, the equivalent of closing prices, for the funds. The bank said 20 mutual fund companies and 26 ETF providers have experienced some pricing problems.
The bank said customers have been able to continue trading the affected funds. But in the absence of accurate prices, some investors may have paid more than they should when purchasing them, said Ben Johnson, director of global ETF research at Morningstar Inc.
Johnson said that figuring out how to compensate investors hurt by the system failure will be a headache. He said mutual fund investors are likely to suffer more damage, because net asset values play a more critical role for funds than they do for ETFs.
U.S. Securities and Exchange Commission rules do not specifically address this matter, said an SEC official who asked not to be named. The bank’s liability may depend on the wording of its contractual agreements with the funds rather than securities law, the official said.
Kevin Heine, an BNY Mellon spokesman, declined to comment on the matter.
SunGard Apology
SunGard, a financial software company with annual revenue of $2.8 billion, said in a statement Thursday that the incident was not caused by any external or unauthorized system access, and wasn’t related to the market turmoil this week. The issue was caused by an operating system change performed by SunGard on Saturday, Aug. 22.
“We at SunGard apologize to BNY Mellon for the adverse impact this unfortunate incident has had on its operations and clients,” SunGard Chief Executive Officer Russ Fradin said…”
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