In this interview for the High Frequency Trading Review, Mike O'Hara talks
to Leo Melamed, financial market innovator, writer, lecturer and
international authority on futures markets. Mr Melamed is recognized...
By Jeff Cox
All of Wall Street's wildly bullish calls on stocks may be having just the
opposite effect, driving wary mom-and-pop investors out of the market
despite the long-standing rally.
SYSTEM ERROR: CALLS FOR BATS TO HALT LISTINGS
NEW YORK (MarketWatch) — More than anything else, BATS Global Markets Inc.'s botched initial public offering Friday may be best remembered for popping a hole in the bubble of free and fair markets.
"Botched" doesn't even seem to be a strong enough word. Debacle? Disaster? Cataclysm?
More calls came Monday for BATS BATS -99.76% to shutter or suspend key parts of its business following a technical glitch Friday that led the newly minted BATS shares to crash. Read more on the aftermath of BATS IPO debacle.
Patrick Healy, who counsels corporate stock issuers on listing matters for Issuer Advisory Group LLC, said BATS "should formally suspend their listing program in the near term."
Healy added that BATS has lost its credibility. "It's unlikely that any CEO would find the listing risks to be acceptable," he said.
The promise of BATS was that it would emerge as an alternative to the big exchanges NYSE Euronext NYX -1.36% and Nasdaq OMX Group Inc. NDAQ -0.99% . It offered free listings, with the promise of speedy and efficient computer trading.
Friday's fiasco, coupled with a mini–"flash crash" in Apple Inc. shares AAPL +1.20% , has exposed not only BATS but the ability of the exchanges and regulators such as the Securities and Exchange Commission to manage a market where volume is dominated by high-frequency traders and too dependent on systems that do not appear to be ready for the opening bell.
BATS Chief Executive Joe Ratterman claims to have the support of shareholders (BATS is owned by Wall Street brokerages). But their interest is in merely cutting trading costs. It's the potential listings that BATS was supposed to leverage into a worthy competitor. Instead, it's completely crushed confidence in the market.
Calls for BATS to suspend its listings business may or may not be heeded. It doesn't matter. No CEO is going to risk his or her neck on a platform that can't even distribute its own IPO.
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