Talk about a swing and a miss.
Exchange operator BATS Global Markets was forced to yank its much-hyped initial public offering yesterday after a software glitch caused wild pricing errors.
The price of BATS shares was not the only victim — early in the day Apple stock experienced a short but wild ride after a single, 100-share trade was priced about 9 percent lower than it should have been.
Apple shares were temporarily halted and the aberrant trades were canceled.
The embarrassing turn of events came on what was expected to be an auspicious day for the firm, which is hoping to battle for publicly listing equities alongside rivals Nasdaq and the New York Stock Exchange.
REUTERS
Jamie Dimon
But the BATS offering quickly went from being toasted to toast.
“This IPO was stepping off the curb into an abyss,” said Larry Tabb, founder of capital markets advisory firm The Tabb Group.
“What a mess,” he added. And it just happened on a day that would be the equivalent of their wedding day, Tabb noted.
“Although our affected market has reopened, in the wake of today’s technical issues, which affected the trading of certain stocks, including that of BATS, we believe withdrawing the IPO is the appropriate action to take for our Company and our shareholders,” said CEO Joe Ratterman.
It’s unclear exactly when BATS decided to nix its own offering entirely.
One trade of BATS of 1.199 million shares did print at $15.25, but all orders related to BATS were broken.
Numerous attempts to fix erroneous price quotes for other stocks, including Apple and BATS, continued until 12:34 p.m.
BATS’ snafu comes as published reports highlighted the fact that regulators, including the Securities and Exchange Commission, are probing the role such exchanges play, if any, in so-called high-speed electronic trading.
One report said that red-faced BATS executives had no current plans to return to the public markets.
Also, it is not known if BATS underwriters, led by Morgan Stanley, will get paid for their work.
Some market observers speculate that the underwriters should not split fees that would range up to $6 million for the botched stock sale because even before BATS’ technical glitch, they were showing cracks.
Underwriters priced BATS stock at $16 — at the low end of the expected pricing range.
“That would be indicative that it was a weaker offering from the start,” said James Angel, a finance professor at Georgetown University.
BATS was founded in 2005 by a group of broker-dealers. The planned 6.3 million sale of shares was meant to allow strategic investors in the exchange, including the estate of now-bankrupt Lehman Brothers, GETCO, Bank of America/Merrill Lynch and Nomura, to cash out.
mark.decambre@nypost.com
BATS, initial public offering, Apple, Larry Tabb
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