09.01.2011
By Terry Flanagan

Regs Approve Bats Listing Venture

The trading platform will start listing shares by the end of the year.

U.S. regulators have given approval for Bats Global Markets to start listing shares, allowing the Kansas City-based trading platform to compete directly with the incumbent exchange operators NYSE Euronext and Nasdaq OMX.

“We are excited to bring competition to the primary listings market in the U.S. as we believe there is a great opportunity to satisfy unmet needs of current and future public companies and other issuers,” said Joe Ratterman, president and chief executive officer of Bats in a release. “Creating a competitive alternative to the incumbent exchanges that brings simple, competitive pricing and superior technology coupled with our world-class customer support, will drive innovation in this market and allow issuers more choice.”

A request to Bats for comment was not immediately returned.

All securities are expected to be listed on its Bats BZX exchange. It began testing its infrastructure along with members and service providers on Aug. 24.

While Bats will look to offer a low-priced alternative for companies to list, some analysts believe that it will be a difficult battle.

“I think they have very little chance, if any,” said Diego Perfumo, an exchange analyst with Equity Research Desk. “The listings business is all about branding. It will be very hard to convince a company to list with you, because your fees are a little lower, when you have no name and no reputation. It’s about exposure. It will be hard to convince a CEO or CFO to save a few pennies and list on Bats.”

Founded about six years ago as an electronic communications network for trading, Bats has since grown to be the third largest exchange operator in the U.S., behind long-time incumbents NYSE and Nasdaq. It currently holds about 12 percent of U.S. equity trading market share.

Bats operates two trading platforms in the U.S., Bats BZX and Bats BYX, as well as and Bats Options, an options exchange, and Bats Europe, a multilateral trading facility and the second largest electronic trading platform in Europe. The latter is part of a proposed merger with Chi-X Europe. The deal is currently awaiting regulatory approval by the European authorities.

Bats in May announced plans to go public in a $100 million initial public offering. Initially slated for late 2011, the IPO is now expected to occur in early 2012 as the company awaits the outcome of the Chi-X Europe acquisition.

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