BATS Global Markets Inc stripped Chief Executive Joe Ratterman of the chairman's role on Tuesday, days after the No. 3 U.S. exchange operator's botched initial public offering.
The board, however, said it unanimously supported Ratterman as president and CEO of the company and cited better corporate governance as the reason for splitting the CEO and chairman roles.
Ratterman, a founding employee of BATS, has led the company since June 2007. He will hold the chairman's position until a successor is found. "You can't ignore the timing of it," said James Angel, a professor at Georgetown University who specializes in the structure and regulation of financial markets. "It is basically a very strong signal that mistakes of this nature can't be tolerated."
The decision comes after a series of glitches hit the market debut of BATS on its own exchange on Friday, causing the company to take the extremely rare step of withdrawing its initial public offering of shares.
The aborted listing also threw into question BATS' growth plans, including its bid to compete with NYSE Euronext NYX.N and Nasdaq (NDAQ.O) in the listings business and expand in Brazil and Canada.
Over the weekend, disagreement emerged between Ratterman and Dave Cummings, the outspoken founder and director of BATS, over the future plans for the exchange.
Cummings called for the company to "develop a credible IPO plan" and "go public in the second quarter, if possible." But Ratterman said there were no plans to try for another IPO in the foreseeable future.
BATS' board met on Tuesday in an emergency meeting to deal with the fallout of Friday's debacle.
While it is still too early to gauge the full impact of the failed IPO on BATS' business, the company's trading business remained on a sound footing.
The exchange was back up on Monday with volume in stock and equity-option trades virtually unchanged from levels before Friday's hiccup.
BATS' main business, the source of about 90 percent of its revenue, is trading U.S. securities listed on major exchanges. "I don't think we'll see much fallout," said Larry Tabb, founder of research and advisory firm Tabb Group. "There might be one or two less programmers, but I think they'll do that pretty quietly."