Tag Archives: Guggenheim Partners

ETF Pricing Glitch Rattles BNY; SunGard Software Snafu

When it rains it pours. While many ETF investors have been sucker-punched while trying to execute orders during the past several highly volatile days, MarketsMuse finds that a second shoe dropped Monday on the heads of thousands of BNY Mellon customers thanks to a software snafu attributed to market data vendor SunGard systems. The “computer glitch” has impacted the Net Asset Value (NAV) pricing for nearly 800 exchange-traded funds and mutual funds administered by BNY, the world’s largest custodian.

According to the Wall Street Journal, BNY Mellon raised the alarm with regulators and held emergency calls with customers to try and resolve the problem.The system, known as InvestOne and run by financial software provider SunGard, resumed with limited capacity on Tuesday but was still not fully operational on Wednesday, leaving BNY Mellon with a backlog of funds to price.

sungard glitch1Morningstar, Inc., the fund research firm said that 796 funds were missing their net asset values on Wednesday, including ETFs operated by Goldman Sachs, Guggenheim Partners and several dozen mutual funds sold by Federated Investors. Invesco PowerShares Capital Management had 11 ETFs affected by the glitch, a spokeswoman said.

BNY Mellon said it was able to construct Monday net asset values (NAVs) for all affected funds. But there remains a backlog of Tuesday NAVs that still need to be generated.

The problems with calculating the net asset value of ETFs could raise trading costs for investors, said Todd Rosenbluth, director of ETF and mutual-fund research at S&P Capital IQ.

Several traders said they were forced to calculate their own net asset value for ETFs and that they widened the spreads, or the difference, between listed buying and selling prices to accommodate for the higher risk of trading.

“We measure our edge in terms of subpennies,” one trader said. “We can’t afford to be off by a penny.”

Early in the week, BNY Mellon notified regulators and U.S. stock exchanges about the issue. The Securities and Exchange Commission is monitoring the situation, an SEC official said.

“No one here can understand why it’s not up and running yet,” said one executive at a firm that was affected.

For the full coverage by the WSJ, please click here