More than 700 miles from Wall Street, the New York Stock Exchange’s backup data center on Cermak Road in Chicago is supposed to safeguard US markets, standing by at all hours in case disaster ever strikes the world’s largest venue for trading shares.
When markets are closed, it participates in a well-worn routine, with NYSE staffers turning on and off systems to ensure everything works. But heading into Tuesday, an NYSE employee failed to properly shut down Cermak’s disaster-recovery system — leading to a disaster.
That human error, described by people with direct knowledge of NYSE’s internal operations, is what triggered wild market swings when trading opened Tuesday morning in Manhattan. The chaos affected more than 250 companies including Wells Fargo & Co., McDonald’s Corp., Walmart Inc. and Morgan Stanley, in some cases sending stock prices swinging by 25 percentage points in a matter of minutes.
The episode has prompted the exchange to cancel thousands of trades at a cost that’s still being determined. Meanwhile, market professionals and day traders are rattled and waiting for the exchange to elaborate on what it publicly called a “manual error” involving its “disaster recovery configuration.”