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BATS CEO apologizes for computer snafu, says 'timing couldn't have been worse'
NEW YORK (AP) ' The CEO of BATS Global Markets issued a public note of apology on Sunday for withdrawing his company's initial public offering after an embarrassing computer glitch.
"BATS experienced a serious technical failure Friday morning and I want to apologize for not measuring up," said Joe Ratterman, CEO of BATS in a mass email addressed to customers and members of the trading community.
"On Friday we were under the brightest spotlight imaginable . opening our own stock on our own exchange for the first time ever. It doesn't get much more public than that," said Ratterman. "It shouldn't have failed, but it did, and the timing couldn't have been worse."
Since its founding nearly seven years ago, Kansas-based BATS has been competing with much larger rivals Nasdaq and the New York Stock Exchange for a piece of the stock-trading business. On Thursday the initial public offering of its own stock priced at $16, the low end of where the company thought it would trade.
Shortly after it began trading on Friday, the share price plunged to just pennies. Trading in the stock was halted. By late afternoon BATS withdrew its public offering and said it had no plans to refile its IPO. All trades made were to be canceled.
Ratterman tried to explain what led to that spectacular failure. He said a system problem occurred as soon as the exchange tried to open the BATS ticker symbol, failing to roll into a continuous trading pattern as it was supposed to.
"In effect, our newly issued stock did not begin trading as it should and was halted before it ever started trading," he said.
Ratterman said that the exchange fixed the failed software, but a precious two-and-a-half hours had passed by then.
"(It) had eroded investor confidence and made the timely resumption of fair and orderly trading unlikely. As a result, we pulled the IPO and unwound all auction executions."
Earlier on Sunday, Dave Cummings, founder of the BATS exchange and its former CEO, said in another public email that the company should pursue an IPO in the second quarter.
A BATS' spokesman said Cummings' opinions are his own and the company has "absolutely no comment" on the email.
Cummings sits on the board of BATS and is the owner of electronic trading firm Tradebot Systems and technology investment firm Tradebot Ventures. He also owns a stake in BATS.
The botched IPO was a blow not only to the exchange, but to its own plans for the IPO business. In February BATS offered free listings to companies with shares that traded a certain amount each day, hoping to draw IPOs away from Nasdaq and the NYSE.
With about 12 percent of all U.S. stock trading, BATS is the third-largest stock exchange in the country behind NYSE and Nasdaq. The trading problems Friday brought comparisons to the May 6, 2010, "flash crash," when a crush of electronic trading glitches caused a stomach-churning plunge in the markets of about 1,000 points in a matter of minutes.