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Bats Exchange Trading Restored After One-Hour Shutdown

Bats Global Markets Inc., the fourth-largest U.S. stock exchange operator, shut its main market for almost an hour today amid a malfunction in its computer systems.

Trading on the Bats BZX Exchange stopped at 1:10 p.m. New York time and resumed at 2 p.m., according to data compiled by Bloomberg. The issue was caused by an internal network problem, not a software malfunction, Randy Williams, a spokesman for Lenexa, Kansas-based Bats, wrote in an e-mail. “All systems were fully operational for the remainder of the trading day and we fully expect them to run smoothly tomorrow,” he said.

The malfunction is the latest black eye for Bats, which was forced to cancel its initial public offering in March 2012 after the company couldn’t get its own stock trading. In January, Bats said it had discovered computer issues dating back to October 2008 that had allowed about 12,000 trades that violated rules intended to ensure all investors get the best prices.

“The problem they are going to run into if they continue to have these issues is that people are not going to choose them to execute because they are not reliable.” Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a phone interview. His firm manages $1.7 billion. “There are plenty of other exchanges.”

The shutdown was the latest computer malfunction to hit U.S. markets in the past year. In April, the Chicago Board Options Exchange was down for three-and-a-half hours because of a software error, and in August 2012 Knight Capital Group Inc. lost more than $450 million when it bombarded U.S. exchanges with erroneous orders. Knight was later purchased by Getco LLC to create KCG Holdings Inc. (KCG)

Market Share

Before today, the Bats BZX Exchange handled about 8.7 percent of average daily trading volume in the U.S. stock market in 2013, according to data compiled by Bloomberg.

After Bats restored its market, Direct Edge Holdings LLC said on its website that its EDGX Exchange was having trouble processing orders for U.S. stocks listed by NYSE Euronext (NYX) with symbols “SPYV” to “TNC.” That issue was resolved in about eight minutes, according to alerts on the Direct Edge site.

To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Sam Mamudi in New York at smamudi@bloomberg.net; Alex Barinka in New York at abarinka2@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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