BATS To Launch Second U.S. Equities Exchange, BYX, by 2010

BATS Global Markets plans to launch a second U.S. equities exchange in early 2010, called BYX, pending regulatory approval, according to the company.

The owner and operator of BATS Exchange is preparing to formally file an application for the second US equities exchange with the Securities and Exchange Commission in the coming weeks, stated the company issued release.

BATS’ second exchange, BYX, will utilize the same proven, advanced technology, location and connectivity as the existing exchange. Pricing for BYX will be announced at a later date, it said.

BATS is also reacting to competitors that are operating multiple equity platforms with different pricing models. According to Randy Williams, BATS' spokesman, “As competitors in the U.S. have shown, second equities platform offers the opportunity to experiment with pricing models, which differ from a market center’s primary book.

For example, equity markets operator Direct Edge operates two ECN-like platforms, EDGA and EDGX with different pricing models and make-or-take models. NYSE Euronext operates NYSE Arca as well as the NYSE Hybrid Market while Nasdaq OMX operates the Nasdaq Stock Market and Nasdaq OMX BX (formerly Boston Stock Exchange).

In a statement, Joe Ratterman, CEO of BATS Exchange and BATS Global Markets said, “BYX will allow us even greater flexibility in pricing and innovation that will result in more choices for the industry,” stated Ratterman. He noted BATS has been a market leader with “great technology and aggressive pricing since executing its first trade in 2006, Ratterman stated, “The launch of BYX is the logical next step in our efforts to make markets better through the creation of innovative trading tools and services that meet the needs of all market participants,” added Ratterman.

Meanwhile, BATS Exchange and Direct Edge each claim to be either the third largest U.S. equities exchange or equities market, respectively. In less than four years, BATS Exchange has captured 10 percent matched market share in U.S. equities, reported BATS in today’s release. Based on its August monthly volume report, Direct Edge had a record matched share of 12.90%. However, Direct Edge is technically not an exchange yet. Though it operates ISE Stock Exchange, Direct Edge's main platforms (EDGA and EDGX), that produce the lion's share of its volume, are not yet approved as exchanges, so technically, Direct Edge ranks third among U.S. equity markets, according to a spokesman.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio