Pricing is crucial for money managers, which are obliged to provide investors with an accurate price for securities in their funds. The problems have made it much harder for mutual fund and exchange-traded fund investors who rely on accurate pricing to trade in and out of funds. The system, according to Sungard may have calculated inaccurate prices, leaving BNY Mellon the task of having to go through its pricing with a fine-tooth comb and involve financial regulators.
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Fund research firm Morningstar Inc. said about 800 mutual funds were missing their net asset values on Wednesday afternoon.
Unfortunately, the system was not readily fixed and coincided during an extremely volatile trading period – Monday and Tuesday saw record trading across a number of exchanges given the massive swings in valuations brought on by China’s stock market collapse.
In a letter to clients, BNY Mellon wrote, “We recognize the trust that you have placed in us, and sincerely regret the disruption this has caused you and your organization”.
BNY Mellon and its global constituency of fund manager clients are in damage control mode, following a breakdown of a third-party utility run by SunGard. Those services include calculating the price of a fund’s securities each day.
As many as 20 daily-valued registered mutual fund companies and 26 ETF providers have been affected.
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If an investor paid a higher net asset value than he should have, for example, some fund companies believe BNY Mellon should pay that difference.
