How BATS Had One Of The Most Disastrous IPO Experiences

Posted Mar 23, 2012

Bats Global Markets is a 6 year old equity exchange that had to cancel their IPO after errors on their own computer systems derailed trading and caused a halt in Apple. Bats withdrew their IPO as a result of the errors.

Data received by the stock market on Friday showed that Bats was trading at under a penny after being priced on Thursday at $16. At that same time, a 100-share transaction in Apple was executed on Bats so far away from the market price causing it to trigger a halt.

Bats stands for Better Alternative Trading System. They priced 6.3 million shares through underwriters Thursday and appeared set to begin trading at about 90 minutes into the day. The company quoted their shares at $15.25 at 10:45AM on their website, but financial feeds sent to Bloomberg said that 1.26 million shares had been traded with the most recent execution being at 3.84 cents and the lowest transaction being 0.02 cents.

A single trade for 100 shares executed on a Bats venue at 10:57AM sent Apple down more than 9% briefly at $542.80. The cancelled stock offering intended to raise money for Bats’ owners including underwriters Morgan Stanley, Citigroup, and Credit Suisse. Tradebote Systems, Getco, and Wedbush expected to see proceeds from the deal as well.

Bats was founded by a high-frequency trader in 2005 and it was steered to prominence by brokers attempting to hold down fees as the New York Stock Exchange and Nasdaq Stock Market bought their biggest electronic rivals. The company executed 10.9% of U.S. equities volume last month compared with 10.7% a year earlier.