Call it a very bad day for flash traders.
On the very day that BATS, short for Better Alternative Trading System, one of the larger high-frequency trading exchanges in the country, launched its IPO, an errant trade on the BATS exchange caused a mini flash crash in the most valuable stock in America.
At the same time, adding insult to injury, technical glitches led to problems with BATS's own brand-new stock, causing trading in those shares to stop.
There is no evidence that any of these glitches were the result of high-frequency, or flash, trading. But this has been an embarrassing day for a key player in the high-frequency trading industry.
In the course of about five minutes, shares in Apple tanked by 9.4 percent. With a market value of more than $556 billion, Apple is the biggest U.S. public company, and its shares dominate the Nasdaq Composite index and help drive the S&P 500-stock index.
Apple shares have since recovered to their pre-crash level, though the nosedive triggered a momentary halt in trading at the BATS exchange.
In a series of alerts posted to the exchange website this morning, BATS said that it was having "system issues" in trading of companies with stock exchange ticker symbols in the A through BF range -- a category that includes Apple, ticker symbol APPL, and the exchange's own brand-new ticker symbol, BATS. About an hour later, BATS reported that the issues had been resolved. But then it halted trading in that same symbol range again for about ten minutes an hour after that.
The company's IPO priced at $16 a share, at the bottom of their expected price range, the Financial Times reported, and fell as low as $15.25 before trading was halted. At one point, the stock appeared to fall to less than a penny per share because of a technical problem. According to an alert posted to the BATS website this afternoon, the situation got so crazed that the exchange has permanently halted trading of its own stock on the BATS exchange and cancelled all trades of its stock from earlier in the day.
The unfortunate start to BATS's public offering today comes just as The Wall Street Journal reports that the SEC announced a new probe into high frequency trading, a principal activity on that exchange. In particular, the probe will be looking into whether high frequency traders used their close relationships with computerized stock exchanges like BATS to gain an unfair advantage in the stock market, according to the Journal.
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