BNY Mellon Coping After NAV Software Glitch Affects Dozens of Funds

Crucial calculation errors began last week.

Bank of New York on Wall Street
After a rough week, BNY Mellon is picking up the pieces.

Bank of New York Mellon is reportedly close to resolving all issues with electronically-traded fund clients' net asset valuation (NAV) after a software glitch within a SunGard-provided system was identified last week.

The major custodian first suffered an outage on a day of extraordinary trading last Monday following the collapse of the Chinese equities market, though increased volatility and stress on the global markets was not to blame. Rather, BNY's US installation of the SunGard InvestOne fund accounting platform had become corrupted, causing inaccurate daily value calculation.

According to a report this morning from the Financial Times, at least 20 mutual funds and 26 ETF families were affected last week when a software upgrade from SunGard malfunctioned. Among those funds hit were the widely-used Invesco PowerShares ETF family; meanwhile CNBC noted last Wednesday that Prudential, Federated Investors and Guggenheim Partners funds were also affected.

'Far Longer Than Expected'

The problem, BNY CEO Gerald Hassell said in a conference call with clients this weekend, has touched 60 total clients and approximately 1,200 fund structures. The CEO also noted that SunGard's backup system was "concurrently corrupted" at the time of the outage, and the root cause still isn't known.

Alternative system-generated NAVs for affected funds are now in place for Tuesday through Thursday, according to the company, and BNY expects all but one client to have Friday's values by trading today.

"Our focus from the outset has been on working closely with SunGard to restore their platform to improve reliability and performance," said Hassell. "It has taken far longer than any of us would have expected."

The firm says it will engage an independent third party to determine the cause and is working to stabilize its InvestOne environment to avoid future lapses. The US Securities and Exchange Commission is also investigating.

Waters will continue covering the event as more details unfold.


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