Bats Europe

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Bats Europe
BatsLogo-H-RGB-Color.png
Founded 2011
Headquarters London
Products Multilateral Trading Facility
Website www.batstrading.co.uk

Bats Europe (formerly BATS Chi-X Europe) was formed when the two leading pan-European multilateral trading facilities, BATS Trading Europe and Chi-X Europe, combined in November of 2011. Chi-X Europe was acquired by BATS Global Markets, of which BATS Trading Europe was a subsidiary. BATS Chi-X Europe was promoted to exchange status by the Financial Conduct Authority in May of 2013.[1]

Bats Europe was acquired by CBOE Holdings as part of CBOE's acquisition of Bats Global Markets in February of 2017.

Bats Europe is an order-driven pan-European securities exchange that allows participants to trade securities listed in major European markets. The exchange's pan-European offering covers all the components of the Euro Stoxx 50, the eurozone's blue chip index.

On April 3, 2014 the exchange said it had started offering tiered pricing to its customers, meaning a sliding scale of rebates to customers placing orders to trade on its platform and savings to customers who accept the orders. The move was designed to recapture market share from competitors the London Stock Exchange and NYSE Euronext, which already offered tiered pricing.[2]

Connectivity and Services

Connectivity to Bats Europe is available through a number of routes, such as network service provider, leased lines or co-location. The exchange uses the FIX protocol to enable order entry, amendments, cancellations and receipt of executions by trading participants. Market data is available either as a direct feed or via third-party vendors in a standardized format.

Main services include:

  • Displayed order book
  • Chi-Delta - non-displayed order book
  • Chi-Vision - smart liquidity consolidation service
  • Sponsored Access

Bats Europe also offers a pan-European smart order routing (SOR) service, Bats Select, to enable trading participants to access the Bats order books, as well as liquidity at European exchanges, MTFs and dark pools, with a single order.[3]

Clearing and Settlement

Clearing of trades on Bats Europe takes place through the European Multilateral Clearing Facility (EMCF), which offers a wholesale cash market central counterparty (CCP) solution. EMCF has been the CCP for Chi-X Europe since launch.

Exchange for Physicals

In April 2015, BATS Chi-X Europe and ICAP announced new services which, when combined, will enable market participants to trade cleared equity index Exchange for Physical (EFP) transactions anonymously. As part of the new service, BATS enhanced its trade reporting facility, BXTR, by expanding its Exchange Trade Reporting (ETR) services to enable the cash basket of the EFP to be traded on-exchange. Transactions on the enhanced service, which is available to all participants, are facilitated via ICAP Fusion, the firm’s e-commerce portal for trading venues.[4]

BXTR is the largest trade reporting facility in Europe.[5]

Regulation

The firm is an authorized multi-lateral trading facility (MTF), regulated by the Financial Conduct Authority (FCA), the UK’s financial services regulator.[6]

The FCA approved BATS Chi-X Europe’s application for Recognised Investment Exchange (RIE) status effective May 20, 2013. As a RIE, BATS Chi-X Europe will be authorized to operate a Regulated Market for primary listings alongside its existing business. Becoming a full-fledged exchange will also allow for broader access to retail investors.[7]

In August of 2016, BATS Europe officials said the exchange expects other trading venues to adopt the process it began testing that month to provide MiFID 2-compliant order data record keeping, which eliminates sensitive data flowing through its core trading system, and minimizes any potential latency impact caused by large message sizes.[8]

Volume and Market Share

In April 2013, BATS Chi-X Europe recorded market share of 22.4 percent, with an average daily notional value of €7.8 billion. Also in March 2013, the firm set a new monthly market share record in Depository Receipt (DR) trading, with BATS Chi-X Europe earning 7.1 percent market share, exceeding its previous record of 5.9 percent set in March 2013.[9]

History

BATS Europe launched on Oct. 31, 2008 as a multilateral trading facility[10] with Fortis’s European Multilateral Clearing Facility subsidiary acting as its central counterparty clearinghouse.[11]

In 2010, BATS Europe launched a pan-European smart order routing service for access to multiple market centers, including exchanges, MTFs and dark pools, effective Feb. 15, 2010.[12]

Chi-X Europe was created as a response to the EU’s Markets in Financial Instruments Directive (MiFID), which aimed to increase competition and drive down the cost of trading in Europe. Live trading in European equities began at Chi-X Europe on March 30, 2007. By January of 2010, around 1,200 equities and ETFs/ETCs were available for trading on Chi-X Europe. These stocks were listed in the following markets: United Kingdom; Germany; France; The Netherlands; Belgium; Switzerland; Sweden; Finland; Norway; Denmark; Austria; Italy; Portugal; Spain; Ireland. The majority of stocks in the leading indices in these markets are available for trading on Chi-X Europe. Additionally, stocks from a number of Mid cap indices are also available.

Chi-X Europe was the first Multilateral Trading Facility (MTF) to challenge traditional bourses including Deutsche Boerse AG, London Stock Exchange Group Plc and NYSE Euronext by offering lower fees and faster trading.[13] It was owned by a consortium of global financial institutions following Instinet's strategy of rewarding the largest users of the platform with the opportunity to purchase equity stakes. The consortium included BNP Paribas, Citadel, Citigroup, Credit Suisse, Fortis, GETCO Europe Ltd, Goldman Sachs, Instinet, Merrill Lynch, Morgan Stanley, Optiver, Société Générale, and UBS.[14] While Chi-X Europe was developed and launched by Nomura subsidiary Instinet, it is not a part of Instinet's Chi-X Global subsidiary, which was created a year later.

BATS Chi-X Europe launched its pan-European listings business in November 2013 with trading in two exchange-traded funds. The new ETF products are the iShares MSCI Emerging Markets UCITS ETF and the iShares MSCI World Minimum Volatility UCITS ETF. iShares is the ETF platform of asset manager BlackRock.[15] [16]

In September 2014 BATS announced a partnership with independent exchange BX Swiss that allows it to offer cross-listings for ETFs and trade reporting services for Swiss stocks.[17]

In 2014, BATS Chi-X Europe started trading in Turkey's most liquid stocks.[18]

BATS Chi-X Europe introduced a block-trading initiative in the second half of 2015 in advance of the European MiFID II rules that will restrict dark-pool trading. The regulations, which take effect in 2017, will cap trading away from public exchanges except for the biggest orders. BATS' European arm had been part of a consortium of banks and asset managers developing a block trading venue, but later removed itself to launch its own venue. [19]

In 2015 the exchange introduced continuous auctions for share trading, allowing investors to trade large blocks of shares without worrying about being fastest to market. Auctions are typically held at the beginning and end of the trading day but BATS was the first to offer them throughout the day.[20] The new order book is set to go live on October 19, 2015.[21]

In early 2017 Bats Europe teamed up with the financial information provider FactSet to launch two new indices designed to provide insight into the impact of Brexit ahead of Article 50 being triggered by the UK government. Dubbed the Bats Brexit 50/50 indices, they are designed to act as barometers for assessing how Brexit will affect UK companies by analyzing the performance between those that generate a large portion of revenues from the UK.[22]

In March of 2017 the company launched Bats LIS, a buy-side focused block trading service for the European equity market.[23]

Key People

Resources

Related articles:

References

  1. Hemsley sees BATS take flight. Financial News.
  2. Bats Chi-X bids to win back Europe market share. The Financial Times.
  3. European Equities Trading. Bats Europe.
  4. BATS CHI-X EUROPE AND ICAP ANNOUNCE NEW SERVICES TO PROVIDE EXCHANGE FOR PHYSICALS (EFP) TRADING AND CLEARING. ICAP.
  5. BATS Global Markets Reports Year-on-Year Market Share Gains; Becomes #1 Listing Venue for January with 85% of U.S. ETF Listings. BATS Global Markets.
  6. Regulation. BATS Trading U.K..
  7. BATS’ European Arm Wins Exchange Status. Wall Street Journal MoneyBeat.
  8. BATS Seeks Consensus on MiFID 2 Trade Data Collection Reporting Process. Waters Technology.
  9. BATS Global Markets U.S. Equities Market Share Rose In April; Europe Depository Receipts Trading Reached Monthly Record. PR Newswire.
  10. BATS Exchange Completes Rollout of All Securities. BATS Europe.
  11. BATS Europe Gives Fortis Latest Clearing Deal. SecuritiesIndustry.com.
  12. BATS Europe announces smart order router. Automated Trader.
  13. Chi-X Europe’s Misra Quits for ‘Other Interests’. BusinessWeek.
  14. Chi-X Shareholders. Chi-X.
  15. BATS Chi-X Europe launches European listings business. BankingTech.com.
  16. BATS Chi-X Europe to launch pan-European listings business. Reuters.
  17. Bats seeks European expansion with senior hire. Financial News.
  18. BATS CHI-X EUROPE EXPANDS INTO TURKISH STOCKS. BATS Chi-X Europe.
  19. Bats Plans Block-Trading Service to Prepare for Dark-Pool Rules. Bloomberg Businessweek.
  20. Bats Chi-X Europe to start continuous auctions for share trading. The Financial Times.
  21. BATS Chi-X Europe launches auctions order book. Banking Technology.
  22. Bats Europe launches Brexit indices. The Trade.
  23. CBOE Trader e-News. CBOE.
  24. LSE appoints Chi-X Europe's Denzil Jenkins head, compliance and regulation. Finextra.