BATS Global Markets Inc., under pressure from the New York Attorney Generalâs office, corrected statements made by a senior executive during a televised interview this week about how its exchanges work. BATS President William OâBrien, during a CNBC interview Tuesday, said BATSâs Direct Edge exchanges use high-speed data feeds to price stock trades. Thursday, the exchange operator said two of its exchanges, EDGA and EGX, use a slower feed, known as the Securities Information Processor, to price trades. The distinction matters because high-speed traders can use powerful computers and superfast links between markets to outpace traders and trading venues that rely on slower market data, such as the SIP. The exchanges âcurrently use the SIP but will be transitioning to direct feeds from all major exchanges in January 2015,â the company said in a statement issued Thursday. SIP feeds, as theyâre known, carry data about stock orders and trades to the rest of the market. Theyâre fractions of a second slower than direct feeds and use antiquated technology. Nasdaq OMX Group Inc.âs Nasdaq exchange last August went down for three hours due to a glitch in its SIP feed. The exchange operator was contacted by New York Attorney General Eric Schneidermanâs office about the matter after the CNBC interview and was asked to clarify Mr. OâBrienâs statement, according to a person familiar with the matter. The office pressed the exchange to publicly correct the inaccuracy, the person said. Mr. Schneidermanâs office has launched a wide-ranging investigation into how stock exchanges operate, with a focus on whether some high-speed firms get advantages over other firms through special superfast data feeds. BATS and Direct Edge are likely to part of that investigation. The discussion about Direct Edgeâs data feeds emerged on CNBC during a heated exchange between Mr. OâBrien and Brad Katsuyama, the founder of IEX Group Inc. and main character in Michael Lewisâs book about high-speed trading, âFlash Boys.â BATS, based in Lenexa, Kan., last year merged with Direct Edge Holdings LLC, an exchange operator then run by Mr. OâBrien. âWhat do you use to price trades in your matching engine on Direct Edge?â Mr. Katsuyama asked Mr. OâBrien. âWe use the direct feeds,â Mr. OâBrien said. Mr. Katsuyama, whose IEX dark pool markets itself as a haven for investors against high-speed traders, later brought up the issue again. âYou use the SIP to price trades on Direct Edge,â he said. âThat is not true,â Mr. OâBrien said. BATSâs other exchanges, BZX and BYX, primarily use direct feeds to price trades. High-speed traders typically use direct feeds to discern the current state of the market, since the SIP is too slow for them to execute their split-second strategies. The direct feeds also enable them to calculate which direction stocks are going before that information is reflected in SIP feeds, traders say. âOn their faster market data feeds, [high-speed traders] can see a price movement before it hits the slower consolidated feed, and sweep markets that they know use the slower feed,â said Dave Lauer, a former high-speed trader and president of KOR Group, a market-structure lobbying group. http://blogs.wsj.com/moneybeat/2014...y-president-obrien-on-how-its-exchanges-work/
I saw it and it's been a while since i've seen someone so full of sh*t. That guy was a piece of work.
he is a President in the finance world. If the last few years have taught us anything - why should we expect him to know what is going on in his business?
the funny thing is that he was the aggressor taunting both of them..lol. Until Kat turned the tables on him. It was like body slamming a bully.
I dont think he was lying. I think he thought he knew, but was incorrect. That was my take. Although we will never know.