10 Trading Glitches That Stopped The Markets

From flash crashes to naughty squirrels, here are 10 notable exchange snafus that have crippled the stock market. 

2. BATS IPO Bug

On March 23, 2012 the highly reputable exchange operator BATS Global Markets experienced a software bug that caused them to stop their own initial public offering.

Even though BATS spent months on internal testing and weeks of dedicated testing with its customers using test symbols, the technical glitch related to IPO auction software, was not previously detected.

“There was a unique scenario of different option/order types. We conducted the auction successfully but we had trouble transitioning from the auction to continuous trading and that is where the bug was exposed,” CEO Chris Isaacson had said in an interview with Wall Street & Technology.

The tech details came down to issues with symbol matching. BATS splits up the alphabet in 12 ways for scalability so the BATS symbol for the IPO was on the same matching engine for stocks with symbols A-BFZZ, explained Isaacson. Therefore, quotes and orders for symbols on the same matching engine including Apple Inc. [AAPL], were inaccessible, he said. The bug was quickly detected, shut down, and resolved within two hours. However the hit to their reputation was done, and several financial giants committed to buying BATS cancelled their trades. The crushing blow dropped their opening IPO price of $16 down to $0.75 shortly after opening. Unsurprisingly, BATS decided to withdraw their IPO.

 

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio