BATS Global Markets has won approval for BATS Chi-X Europe to become a recognized investment exchange from the U.K. Financial Conduct Authority.
The new status, which takes effect on May 20, allows BATS Chi-X to compete against other European stock exchanges —like the London Stock Exchange and Deutsche Borse — for primary listings. In addition, the London-based company could attract investment managers that are required to send client orders to regulated exchanges.
BATS Chi-X Europe is the largest pan-European equities market operator in terms of market share and notional value traded. In 2011, It was formed in 2011 from the combination of two multilateral trading facilities (MTFs), BATS Europe and Chi-X Europe. BATS paid $300 million to acquire Chi-X Europe.
In a tweet reacting to the news, Justin Schack, managing director/partner at Rosenblatt Securities wrote this is a “a big deal [that] should boost market share at expense of incumbents.”
BATS Chi-X Europe, had a 21.05 percent share of European equities trading in May based on a five-day average percent share, according to the company. LSE, which includes both the London-based and Milan-based platforms, followed with a 18.54 percent five day average market share, according to BATS' data.
“With FCA approval of our RIE application, we will be even better positioned to support the vision of a borderless European capital market and to compete in other areas, such as primary listings,” commented Mark Hemsley, CEO of BATS Chi-X Europe in today’s announcement. “Our RIE status also enables a broader range of retail investors and buy-side firms to connect to our market and enjoy the benefits of competition that MiFID allowed, including trading venue choice, lower fees and improved service and technology. According to Reuters,
As a regulated MTF, the company said it made considerable investment in risk management, market surveillance, and regulatory tools and resources. It plans to continue this investment under its RIE status, to enhance its technology, products and services, according to Helmsley in the release.
In December 2012, BATS Chi-X Europe made its application to the Financial Services Authority (FSA), which became the FCA on 1st April 2013. The application to become an RIE was filed under section 287 of the Financial Services and Markets Act 2000.