BNY Mellon Corp was scrambling to fix a computer glitch on Wednesday that has delayed how billions of dollars of assets are valued, throwing the U.S. funds industry into disarray and damaging the reputation of the world's largest custody bank. BNY Mellon said an accounting system it relies on to calculate the prices of clients' mutual funds and exchange traded funds (ETFs) broke down over the weekend just as investors headed into a global market meltdown sparked by fears over the Chinese economy.
The system, run by financial software provider SunGard, resumed with limited capacity on Tuesday but was still not fully operational on Wednesday, leaving BNY Mellon with a backlog of funds to price.
SunGard, which is being bought by rival software provider Fidelity National Information Services, did not return messages seeking comment.
BNY Mellon raised the alarm with regulators and held emergency calls with customers to try and resolve the problem.
"No one here can understand why it's not up and running yet," said one executive at a firm that was affected.
The glitch occurred on a SunGard system called InvestOne, which is used by financial institutions managing more than $28 trillion in assets.
BNY Mellon said it outsources some of its net asset value (NAV) calculations to SunGard.
The timing of the pricing glitch happened as China's stock market meltdown reverberated around the globe, spooking investors while casting doubt on whether the U.S. Federal Reserve would raise interest rates this year.
"No one needs any more uncertainly in the markets or in investors' investment accounts,” said Dan Sondhelm, senior vice president at SunStar Strategic, a financial services consulting company in Alexandria, Virginia.
Several dozen funds run by Federated Investors Inc alone were affected by the pricing glitch, including the $1.2 billion Federated Muni and Stock Advantage Fund, Federated said.