As we have seen, the largest and second-largest U.S. stock exchanges have been having some trouble with little things like IPOs and processing and reporting trades. Now, it's the third's turn:

Bats Global Markets Inc., the third- largest U.S. stock exchange operator, said its computers allowed trades that violated rules intended to ensure all investors get the best prices for equities over a period of four years.

The electronic exchange's technical problems also allowed "technical infringements" of short-selling regulations.

Bats said some mistakes occurred with so-called price- sliding orders that re-price trade requests based on the movement of the national best bid or offer, under specific circumstances involving other orders. Additional infractions took place when orders pegged or tied to the national best bid or offer traded through that level or executed at a price not permitted under the short-sale rule because of the actions of unrelated other orders.

The trades at inferior prices, called trade-throughs because they trade through or ignore the best available bid or offer, happened 433,000 times, an average of 410 a day from October 2008 to January 2013 on the main Bats stock exchange, the company said. Almost 8,000 similar incidents occurred on the second Bats stock exchange and 617 on its options market, the firm said. Short-selling violations involved more than 3,600 incidents across its equity venues, Bats said.

Bats Says System Errors Caused Pricing Problems Over 4 Years [Bloomberg]
BATS Says 'System Issue' Has Led to Pricing Problems Over Past 4 Years [WSJ]