What's Next for BATS?

What happens if you have an IPO and no one trades? Or no one is able to trade? That's the problem that confronted stock exchange operator BATS.

BATS has cancelled its IPO, "in the wake of technical issues, which affected the trading of certain stocks, including that of BATS..." says CEO Joe Ratterman. All trades in the AM will be cancelled.

Trades? What trades? BATS went public this morning at about 11:14am ET...for about 10 seconds. I kid you not. Ten seconds.

There were initial trades at $15.25 (stock was priced at $16), and then within seconds, a series of roughly 560 trades in pennies, that were clearly erroneous.

What happened? We are still waiting for an explanation. I have ventured a few guesses on my prior TraderTalk post.

What will happen to the IPO? Can they retool and refloat it? Sure they can. But don't bet on it.

One big problem: they had a $12.01 cost on their stock. They went public at $16. David Menlo, head of IPOFinancial.com, told me: "They are now officially buried at a loss. The company will have a long way to go before or if any entity will value it at anything close to that level."

And most traders I talked to said withdrawing the IPO was the smart thing to do. The reason: no litigation, or at least much less litigation.

One final point: BATS' main exchange accounted for only 6.7 percent of all market volume today, notably less than the roughly 8.61 percent average it accounted for in the prior 4 days. Not sure if this is an anomaly, or due to trading halts, or a sign of less confidence in the exchange.

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