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.
BNY Mellon is one of the largest asset managers in the world, relying on SunGard's InvestOne accounting system. However, on the back end of a failed software upgrade to its system, the utility seemingly broke down, placing billions worth of dollars in a precarious state of disarray.
The original genesis for this issue stemmed from a software malfunction earlier this week on Monday, which BNY Mellon uses to provide net asset values (NAVs) for mutual funds and Exchange traded funds. The nature of this system is highly sensitive, given the need for these funds to be valued on a daily basis. However, an assortment of regulators and fund managers have underscored doubts and lingering concerns as to whether major price discrepancies at this time could have led to funds being bought and sold at less than accurate prices.
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. While the system was partially restored on Tuesday, it had not been fully restored by the end of trading a day later on Wednesday.
As a result, BNY Mellon has now begun the painstaking step to work with regulators and fund managers to reconcile its systems and recalculate the NAVs, whilst working its way through a backlog of unvalued assets – it is presently unknown how long this process will take, however it could take upwards of several days to complete, though BNY Mellon is working with SunGard.
According to BNY Mellon spokesman Kevin Heine, in a recent statement on the turmoil, "The SunGard system became available with limited capacity late yesterday. Our teams have been working together to clear the backlog and we are working with SunGard to resume normal processing as soon as possible."
SunGard is a provider of technology solutions for the financial industry, having built a wide base of products and customer types they support. The group recently made headlines after it scrapped its initial public offering (IPO) plans in favor of a $9.1 Billion acquisition by FIS.
