Bank Scrambles to Price Funds After Glitch
August 27 2015 - 4:31PM
Dow Jones News
By Kirsten Grind
Computer problems plagued the U.S. asset-management industry for
a fourth consecutive day Thursday, as Bank of New York Mellon Corp.
said it was still working to correct a glitch that caused hundreds
of mutual and exchange-traded funds to miscalculate the value of
fund assets.
The bank said in a statement that the performance of the
accounting platform it uses to price fund securities, the SunGard
InvestOne platform operated by SunGard Data Systems Inc., began to
improve in the early morning hours Thursday, "although some
performance issues remain."
BNY Mellon, the largest fund custodian in the world by assets,
provides accounting services for money managers. Those services
include calculating the price of a fund's securities each day.
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.
On Monday, the pricing system went down. It went back online
midday Wednesday, the system was working through a backlog Thursday
afternoon, the bank said.
In its first public statement on the matter Thursday afternoon,
SunGard said that the malfunction appears to have been caused by an
operating system change performed on Aug. 22. Although the change
had been tested by SunGard, the platform "became corrupted," when
applied to SunGard's InvestOne platform used by BNY Mellon, the
company said. The backup system was concurrently corrupted.
"We at SunGard apologize to BNY Mellon for the adverse impact
this unfortunate incident has had on its operations and clients,"
SunGard president and CEO Russ Fradin said in a statement. The
company said the issue wasn't related to "the recent turmoil in
equity markets."
Fund-research firm Morningstar Inc. said about 800 mutual funds
were missing their net asset values on Wednesday afternoon.
On Thursday, some fund firms worked to restate the net asset
values of their funds from previous days after receiving updated
information from BNY Mellon. In an update to investors Thursday
morning, Federated Investors said it has received net asset values
for Monday, and that the values it calculated for two of its mutual
funds differed from BNY Mellon's figures.
The company said it is recommending reprocessing shareholder
transactions in both those funds for that day. The company is still
relying on its internal valuation committee to price securities
because of "a significant delay in the availability of net asset
values," Federated said in a statement.
By Thursday afternoon, BNY Mellon said it had generated net
asset values for affected ETFs and mutual funds for Tuesday, and
had begun work to process the prices for Wednesday. The bank
expected to finalize net asset values for Wednesday by Thursday
night. After that, the bank said it would work on net asset values
for Thursday.
"Teams continue to work around the clock," the bank said in an
earlier statement.
In a separate afternoon statement, the bank said it continued to
have "an open dialogue with the regulators and exchanges to keep
them apprised of the current status of this situation."
The outage, unprecedented across the money-management industry,
affected a number of firms offering mutual funds and ETFs,
including Goldman Sachs Group Inc., Prudential Financial Inc.,
Guggenheim Partners LLC. and Voya Investment Management. By
Thursday afternoon, multiple fund companies were reporting
discrepancies of 1% or more in the prices they had calculated
earlier in the week compared with the new prices from BNY
Mellon.
Invesco PowerShares, a large provider of ETFs, revised the net
asset value of 14 funds, according to a news release.
SEC officials reviewing the pricing glitch are aware of only a
few instances of price discrepancies greater than 1% of what they
should have been, according to people familiar with the agency's
review of the matter. They cautioned the figures are preliminary
stages.
Write to Kirsten Grind at kirsten.grind@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 27, 2015 17:16 ET (21:16 GMT)
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