U.S. exchange operator BATS Global Markets withdrew its initial public offering mid-Friday after it became clear investor confidence had eroded, its chief executive said on Sunday, adding there are no plans for an IPO in the foreseeable future.
BATS' own stock was to be its first listing, but the IPO ended up a disaster after a software bug briefly sent the price of the shares down from $16 to less than a penny before trading was halted. Later in the day, BATS took the extremely rare step of withdrawing the IPO altogether.
"Basically because we're an exchange listing our own stock and we're having trouble operating the auction process and continuous trading as an exchange, it became clear to us that investor confidence had eroded," Joe Ratterman said in an interview.
"We had a technical blip. It's completely regrettable and very painful," he added. "We put other investors and the market's stability first, and our own needs second. So I think people will give us a shot to re-earn that trust."
BATS, the third-largest U.S. stock exchange, is owned by many of the world's largest banks and trading firms. In the last decade, it has taken on the New York Stock Exchange and Nasdaq in the trading of stocks and recently, also wanted to challenge them in listings.
Ratterman's explanation and mea culpa came hours after Dave Cummings, the exchange's founder in 2005 and current board director, recommended that it push forward with the long-held IPO plans in the second quarter.
When asked about the proposal, Ratterman, who took the reins from Cummings in 2007, said only that BATS had no plans to go public in the foreseeable future. He said the board would also have to consider Cummings' other suggestion: that all bonuses at BATS be suspended.
The decision to pull the IPO came after discussions with underwriters and with a board committee, Ratterman said, adding the IPO syndicate desk had heard from some concerned investors.
The U.S. Securities and Exchange Commission was alerted within minutes of BATS' shares plunging, he said.
Ratterman added that he does not expect legal problems because no BATS shares or money actually changed hands on Friday. Because the auction trades were broken, "no investors will be out," he said.
