BATS Global Markets chief executive Joe Ratterman told customers and members of its exchanges that last week's "failure to perform as expected has no excuses.”

The “serious technical failure” meant that the firm was not able to execute the first-ever listing of a public company on its BATS Exchange. And the shares that were to be listed belonged to BATS itself, in its first offering of its shares to the public.

The firm’s technology for auctioning shares in a newly listed stock had been tested for “many weeks,” Ratterman said.

In fact, he said, the technology went through two phases of testing: several months of internal testing and then weeks of testing with “trading participants.’’

“It shouldn’t have failed, but it did, and the timing couldn’t have been worse,’’ Ratterman sadi.

The failure meant the company was unable to roll into continuous trading with the BATS shares immediately following the opening auction. “In effect, our newly issued stock did not begin trading as it should and was halted before it ever started trading,’’ he said.


Technology implementations are prone to failures and unexpected outcomes, even after going through rigorous testing, Ratterman said. But BATS’ main exchange, the Z exchange, has had 99.9 percent uptime for the past three years, he said.

“These events are a setback for BATS, but we are not going to let this moment define who we are as a company,’’ he said, in a separate statement. “We want you to know that you have our commitment that we will do better,’’ in the company’s stated mission of Making Markets Better.

He also said that the “three erroneous prints” that triggered a five-minute stop in trading in Apple stock was unfortunate. But the interruption also showed “the industry’s single stock circuit breaker system worked as planned and proved that recent improvements in U.S. equity market structure are working as intended.”

Tom Steinert-Threlkeld writes for Securities Technology Monitor.



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