Infosys trading: Infosys ADR 40% spike traced to data error, algo trading, says report

An abrupt and outsized rally in Infosys Ltd’s American Depositary Receipts during early US trading on December 19 has been linked to technical distortions in market data and automated trading activity, rather than any fundamental news about the company, The Chronicle Journal reported.

Infosys ADRs surged more than 38% shortly after the opening bell in New York, briefly climbing to nearly $27 before the New York Stock Exchange (NYSE) stepped in to halt trading, Reuters reported. The abrupt rally stood in sharp contrast to trading in India, where Infosys shares ended the session with a modest gain of 0.7%, closing at Rs 1,638 on the NSE, with no material news or corporate announcement to justify such a move.

The Chronicle Journal report suggested that the near-50% intraday jump was likely the result of a ticker-mapping error across multiple financial data platforms. This discrepancy may have confused automated trading systems, triggering aggressive algorithmic buying in what is typically a thinly traded ADR. As buy orders fed into one another, the price spike became self-reinforcing until exchange-level volatility controls were activated.

According to the report, several data providers in the days leading up to the incident had incorrectly mapped the “INFY” ticker to an unrelated entity, while still attaching Infosys-specific financial data, earnings metrics and news headlines. Algorithmic trading models scanning for mispricings or unusual divergences may have interpreted this mismatch as a market anomaly, prompting rapid buy orders. The impact was amplified by limited liquidity and low trading volumes in the Infosys ADR market.

The ADRs had closed the previous session at around $19.18 but jumped to as high as $27 within minutes of the market opening. The NYSE subsequently imposed multiple Limit Up–Limit Down (LULD) volatility halts as prices breached permissible bands. After trading resumed, prices retreated sharply, reinforcing the view that the spike was technical in nature rather than driven by fundamentals. The absence of any comparable reaction in Infosys’ India-listed shares further supported this assessment.

An American Depositary Receipt allows US investors to trade shares of foreign companies on US exchanges without directly accessing overseas markets or currencies. Some reports also pointed to short-covering linked to US stock-lending dynamics as an additional factor that may have intensified the move.

The Chronicle Journal noted that the episode underscores structural vulnerabilities in ADR trading. Because ADRs trade when home markets are closed, they are more exposed to data inconsistencies, liquidity gaps and automated trading feedback loops. While ticker confusion incidents have occurred before, the scale of the Infosys move — involving a globally recognised, blue-chip Indian IT firm — has drawn heightened scrutiny.

US exchanges and regulators are now expected to review the December 19 trading activity, including whether data-feed inconsistencies played a material role and whether existing volatility safeguards functioned as intended.