BATS receives SEC exchange approval
By Anuj Gangahar in New York
Published: August 18 2008 19:33 | Last updated: August 18 2008 19:33
BATS Trading, the upstart Kansas-based equity trading platform, received approval from the US Securities and Exchange Commission on Monday to operate as a registered national securities exchange, adding to mounting competition in the stock exchange sector.
BATS has been taking market share from the New York Stock Exchange and Nasdaq Stock Market, the two largest US exchanges, since its inception two and a half years ago, although critics said this is because the prices it charges customers to trade on it are unsustainably low.
The transition into an exchange, from the firm’s current status as an electronic communications network, is expected to take about 60 days. It filed for exchange status in November last year.
Joe Ratterman, chief executive of BATS, said: “As we have stressed repeatedly, our motivation to become an exchange has come from our desire to participate directly in the national market system and compete on a level playing field with our primary competitors, Nasdaq and the NYSE.”
“We realise there is a lot of hard work ahead of us as we take on added regulatory responsibility,” he said.
BATS averaged matched market share of 10.1 per cent of US equities per day in July.
Earlier this year, the trading network crossed the 1bn volume mark for one day of trading for the first time.
Last year, BATS unveiled a lower tariff for trading shares in which it, in effect, gave money to customers in exchange for their business. The move saw trading volumes more than double to over 200m shares a day.
BATS is backed by an ownership group including affiliates of Citigroup, Credit Suisse, Deutsche Bank, GETCO, JPMorgan, Lehman Brothers, Lime Brokerage, Morgan Stanley, Merrill Lynch, Tradebot, a software developer, and Wedbush, an investment bank.
BATS is preparing for the November launch of a European offering, which will compete head-on with the London Stock Exchange, initially trading in UK stocks, with continental European stocks coming later.
BATS’s European launch will come after the launch of two rival platforms - Turquoise and a “pan-European market” backed by Nasdaq OMX, the US exchange operator.
All three will provide added competition for incumbent exchanges in Europe, which have already seen the emergence of Chi-X, another investment bank-backed equities platform.
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