Following a wacky set of events on Friday, Joe Ratterman, the chief executive officer of BATS Global Markets, has reached out in a public letter to explain what happened with the company's withdrawn IPO.
Though the stock was supposed to start trading Friday morning, Mr. Ratterman said that the shares experienced a "serious technical failure" when they failed to roll into continuous trading following the open auction.
The technology "shouldn't have failed, but it did, and the timing couldn't have been worse," he said.
"Technology implementations are prone to failures and unexpected outcomes, even after going through rigorous testing," Mr. Ratterman added. The problem, however, was that "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."
Does a technical glitch on the company's first day of trading warrant pulling the IPO? In BATS eyes, without a doubt.
"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," M. Ratterman said. "Had the delay been only a few minutes, the restart process would have possibly been manageable."
But because the trading had been halted for so long, "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."
Such last minute withdrawals are extremely rare. The that in 2007 an IPO was pulled after it priced because of a lawsuit, and another in 1983 was pulled this late after the death of a chief executive.
Before being withdrawn on Friday, BATS' IPO was priced at $16 per share and would have raised $100-million, valuing the firm at $760-million.