A Safe Pair of Hands
Bats, which stands for Better Alternative Trading Systems, also admitted that these system issues had potentially been going on for years, undetected, and customers had almost certainly lost money due to them. The main issue was a technical one, which meant that transactions had been completing away from the National Best Bid and Offer (NBBO). NBBO rules state that transactions must always execute at the best bid and ask price across any exchange in the US, with both brokers and exchanges obligated to comply.
Direct Edge also announced its own set of glitches. The first had been going on since 2011, while the second, more serious, had also been occurring for years. Then, the New York Stock Exchange announced its own technical issue which meant prices had been executing away from the NBBO, although this was by far the most minor fault, lasting for four minutes last week.
It's all gone a bit Pete Tong for US bourses, essentially. As my colleague Steve Dew-Jones reported last week, although the actual amount of money lost by participants through the latest problem with BATS isn't dramatic, relatively, it's yet another reputational sideswipe that the venue can ill-afford. Likewise, for a small exchange, again relatively speaking, such as Direct Edge, it's hardly a great advertisement to increase order flow.
More staggering is that these issues have been going on for so long without being detected. In NYSE's case at least, without defending it, the error only lasted for four minutes before being picked up. How this could potentially have been occurring for so many years at the other two, without anybody noticing, beggars belief.
The exchange business, like it or not, is an electronic one now, digitalized, decimalized and mechanized. Gone are the days when prices were haggled and shouted on the floor at Broad Street as a primary form of negotiation. Trades are executed through fiber optic cords now rather than vocal chords, and information is transmitted at light speed through telephone wires, rather than couriered to Midtown by a teenager on a bicycle. It adds fire to the Luddite bonfire when issues such as this occur with the alarming frequency that they seem to.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
Chris Edmonds takes the reins at ICE Fixed Income and Data Services
Edmonds is now leading ICE’s fixed income and data business as the rush to provide better data and analytics in fixed income builds.
Systematic tools gain favor in fixed income
Automation is enabling systematic strategies in fixed income that were previously reserved for equities trading. The tech gap between the two may be closing, but differences remain.
Waters Wrap: Examining the changing EMS landscape
After LSEG’s decision to sunset Redi, Anthony examines what might lie ahead for the EMS space.
This Week: Clear Street, AXA/AWS, TD Bank/Google Cloud and more
A summary of the latest financial technology news.
LSEG to sunset Redi EMS in favor of Tora
Sources say competitors will look to seize on the decision to win over Redi’s sizeable US client base.
WatersTechnology latest edition
Check out our latest edition, plus more than 10 years of our best content.
Getting aggressive: Overbond uses AI to assess dealer axes
The fixed-income analytics specialist has developed a new tool to help buy-side firms decide if they’re getting a good price from their dealers.
Most read
- Chris Edmonds takes the reins at ICE Fixed Income and Data Services
- Deutsche Börse democratizes data with Marketplace offering
- Sell-Side Technology Awards 2024: All the winners