Dear BATS Customers and Members of the Trading Community,
It is with great humility that I write to you for the first time in quite some while. As you are probably aware, we have been working towards a planned IPO for many months, and as a result of the quiet period restrictions I did not reach out as often as I would have liked recently.
Let me get right to the point … BATS experienced a serious technical failure Friday morning and I want to apologize for not measuring up to the level of excellence that you have come to expect from us.
You undoubtedly have heard that we experienced a system problem in our attempt to open the BATS ticker symbol for the first time on Friday morning. We failed to roll into continuous trading with our new BATS ticker 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.
Technology implementations are prone to failures and unexpected outcomes, even after going through rigorous testing. Every market center and every trading participant has experienced technical issues in their history. Our historical reliability has been very strong, with 99.9% uptime on our primary BATS BZX Exchange over the last 3+ years. 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.
Our listing Exchange has an obligation to operate and maintain fair and orderly markets. In the ordinary course, when an exchange experiences a technical problem, normal trading in the affected securities resumes once the technical problem is resolved. This situation was unique, however, because the affected security was our own. After fixing the software module that failed, and rolling it back into production, we were faced with how the market would react to a re-opening of our stock after the failed first start. Had the delay been only a few minutes, the restart process would have possibly been manageable. But after 2 1/2 hours had transpired, we determined that this was a material event that 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.
We take pride in our technology, and Friday’s failure to perform as expected has no excuses. In addition to several months of our own internal testing, we thoroughly tested this new auction functionality with trading participants for many weeks prior to Friday. It shouldn’t have failed, but it did, and the timing couldn’t have been worse.
To those who have supported us through the last 6+ years as we have brought competition, efficiency, and innovation into the markets we operate, please accept my sincere apology and our commitment as a company to do much better. I also extend regrets to the many institutions we met with over the past couple of weeks on the IPO roadshow. We owe it to all of you to do better and we will work even harder to earn your trust and confidence in the months and years ahead. Despite the setback we suffered last week, we intend to build on our long track record of success and keep moving forward.