Interactive Brokers revealed that they faced a massive $48 million loss resulting from a recent glitch at the New York Stock Exchange (NYSE). VCPost reported that the glitch temporarily displayed incorrect stock prices, including a dramatic -99% drop in shares of Warren Buffett's Berkshire Hathaway (BRKa.N).

Such outages, caused by software and hardware malfunctions, have become increasingly common as trading has shifted from traditional floor-based methods to electronic systems. However, these glitches can disrupt markets, unsettle investors, and sometimes lead to regulatory scrutiny and broker disputes.

Reuters reported that the brokerage company had filed claims with the NYSE seeking compensation for these losses, but according to Interactive, the exchange denied their requests. 

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How Brokers Lose Millions

Interactive Brokers attributed its losses to actions taken by its clients, who sought to capitalize on the steep drop in Berkshire's stock price. 

After trading in Berkshire's Class A shares was halted, customers rushed to place the buy orders, expecting to secure shares at the drastically reduced price of $185 per share, down from the normal price of around $622,000. 

However, when trading resumed, these orders were executed at prices as high as $741,971.39 per share, greatly above the anticipated purchase price.

Interactive Brokers indicated that it absorbed many of these trades and is evaluating its options, including potential legal actions. Despite the financial impact of the incident, the firm stated that it does not anticipate a material impact on its overall financial condition.

The NYSE has yet to respond to requests for comment on the Interactive Brokers' claims and their alleged denial of compensation.

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