Fallout from Order-Handling Errors Unclear

Kansas City, Mo.-based Bats Exchange began the series of confessions last week, before Direct Edge and the New York Stock Exchange (NYSE) joined in.

Santhosh Patil, strategic services principal at software vendor Infogix, says he wonders how Bats managed to operate without knowledge of the errors for almost five years. Vendors like Infogix provide technology that can help, says Patil, even if it may not solve the problem in its entirety.

"We are not in the business of actually fixing the problem or providing a solution to their current issues, but what we can do is help them identify them, so they can go back and make changes to their systems," says Patil. "I don't know if there is a way to completely solve this, because these transactions happen so fast."

The failures did not result in serious financial losses, Patil says, but he adds that there will be consequences in terms of reputational damage.

"In terms of customer service and embarrassment, it is going to have a big impact," Patil says. "In terms of a fine from the regulators, I don't know how big this is going to be because Bats probably recorded only half a million dollars in terms of impact, but it definitely gives them a pretty bad name."

In terms of a fine from the regulators, I don't know how big this is going to be because BATS probably recorded only half a million dollars of impact, but it definitely gives them a pretty bad name.

Mindset Shift
Jonathan Chin, product management specialist at Infogix, says there must be a change in mindset in the industry to ensure there is no repeat.

"It starts with policy, and starts with implementing solid and sound policies, and it's finding a way to technically implement those policies," says Chin. "And that's where we are able to come in and add value, while adding operational efficiency to a lot of these organizations. We're already starting to see this on more of the retail, consumer banking side, and it's something we will continue to work with customers on."