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BATS Europe Targets Market Share of London Stock Exchange

Offers pricing special in September, wih 0.40 basis point rebate for adding liquidity, and a free liquidity removal incentive in UK stocks.

On Sept. 1st, BATS Europe, the European multi-lateral trading facility (MTF), will launch a month-long pricing special designed to take market share away from the London Stock Exchange in UK stocks.

According to today's announcement, BATS will offer inverted pricing and a free liquidity removal incentive for UK stocks beginning on the 1st of September. (Inverted pricing is when the rebate for adding liquidity is higher than the charge to remove liquidity).

Under the BATS Europe pricing special, the standard rate for UK stocks in September will be a rebate of 0.40 basis points for adding liquidity (or 40 cents per 100 shares), with a charge of just 0.20 basis points (or 20 cents per 100 shares) to remove liquidity. According to BATS Europe, this is the lowest liquidity removal fee for UK stocks among major exchanges and MTFs.

As a bonus, participants whose daily average notional traded in UK stocks on BATS Europe is 50 million pounds or greater in September will not be charged for removing liquidity on UK stocks during the month.

"As BATS Europe's participant base expands we are renewing our commitment to the trading community, by offering special pricing unmatched by our competitors. The low latency, highly efficient BATS Europe platform is geared to handle trading from each and every type of participant with its consistent, resilient performance, and we look forward to earning your business," stated Mark Hemsley, CEO of BATS Europe in the release.

BATS Europe is initiating the pricing special after the LSE's share of its own securities dipped below 70 percent intraday for the first time in May, and three months later (August), dropped below 60 percent for the first time, noted the BATS Europe spokesman.

In going after the LSE's market share, BATS is drawing upon previous pricing promotion strategies that have worked in the past. In June-July BATS ran a pricing promotion in Europe for NYSE Euronext securities, and almost a month after the end of the special, its market share in Euronext securities has remained significantly higher than pre-promotion levels, notes the spokesman. For example, current market share in the French CAC 40 (Paris Bourse) is 31 percent above pre-promotion levels, AEX (Amsterdam Stock Exchange) share is up 17 percent and BEL20 (Brussels Stock Exchange) share is up 79 percent. Also, in the past, BATS ran two similar pricing specials in the U.S.—in January 2007 for Nasdaq-listed securities and again in September 2007 for NYSE stocks. In both cases, BATS spokesman said the market share gains were maintained and hav grown over the long term.

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

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