BATS Says System Errors Affected Pricing For 4 Years
January 10, 2013
Nasdaq OMX plans to reimburse its members up to $62 million for losses related to the Facebook IPO, the New York-based company said July 20. The cap on Nasdaq Stock Market’s liability stemming from specific technology errors and malfunctions it causes is $3 million, according to the exchange’s rules, and the higher payout is voluntary. Exchanges have immunity from losses related to activity they undertake as part of their duties as SEC-registered self-regulatory organizations.
Legislation that created the SEC in 1934 also deemed the main venues self-regulatory organizations that oversee their member firms and trading. Critics say the Facebook mishap shows how changes in the structure of markets have made old regulations obsolete.
“BATS is a self-regulatory organization and they’re the first line of defense,” said Saluzzi of Themis. “But it’s for the SEC to come in and say maybe some of these order types shouldn’t be approved because the market is too complex.”