This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

BATS IPO: Accidental Death or Murder?

Stocks in this article: NDAQ

NEW YORK ( TheStreet) -- In the board game Clue, death could come from Colonel Mustard with a candlestick in the parlor.

On Wall Street, the culprit could be a competitor with a $2,000 sell order over a computer network.

The failure of BATS Global Markets' initial public offering two weeks ago has brought out conspiracy theories among a community of Wall Street "algos," or algorithm-based traders, who use computer science and small, rapid-fire trading to make millions of dollars.

The theory, first cited on the industry blog Zero Hedge and later explored by industry publication Advance Trading, says small groups of buy-and-sell orders were sent over the vast network that connects U.S. stock exchanges with the intent to push prices down to harrowing levels as BATS tried to tap the public markets for the first time.

The deadly order was intentionally programmed to send out low-ball offers that would hit a so-called automated quoter running on Nasdaq to nudge the IPO into a death spiral, according to theorists.

"It was an algorithm from somebody connected through Nasdaq and the intent was to bring the price down to zero," says Eric Scott Hunsader, a software developer and president of market data-feed firm Nanex. "And it wasn't a stupid algorithm. It was something that was intent on working its magic."

Trading glitches at the high-speed electronic exchange on March 23 forced BATS to withdraw its much-anticipated IPO. The same glitch also caused a brief, but dramatic, drop in Apple's (APPL) shares.

According to published reports and BATS' own timeline, the company priced an initial public offering of 6.3 million shares at $16 on Thursday, March 22, with shares set to open on the company's own BZX Exchange the following day under the ticker "BATS." Nasdaq would also quote and trade prices on BATS shares.

On the day of the IPO, BATS shares began trading at 10:30 a.m. But at 10:45 a.m., BATS reported that it was having trouble with its IPO auction system. By 12:45 p.m., BATS had pulled its IPO.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs