BATS, Direct Edge merging to form 2nd US stock exchange
By Veronique Dupont, AFPNEW YORK -- Electronic exchange operators BATS Global Markets and Direct Edge Holdings announced Monday they would merge to create the second-largest stock exchange in the United States.
August 28, 2013, 11:41 am TWN
The proposed agreement unites two companies originally created by banks and trading firms to compete with the major U.S. exchanges and highly suited to high-speed trading.
Currently, the New York Stock Exchange accounts for 23 percent of all the shares traded daily in the U.S., compared with 18 percent for the Nasdaq Stock Market.
BATS and Direct Edge represented 20.6 percent of shares traded in the U.S. so far this month.
The merger will keep the four U.S. equity exchanges run by BATS and Direct Edge in operation: the BATS BZX and BYX Exchanges and the Direct Edge EDGX and EDGA exchanges.
The transaction is expected to be completed in the first half of 2014, subject to regulatory approvals, BATS and Direct Edge said in a statement.
The terms of the deal were not disclosed.
“This agreement is an important milestone for the U.S. equities market and other markets around the globe as it will combine two organizations that have been innovative in creating a more competitive marketplace to benefit all investors,” Joe Ratterman, BATS chief executive, said in the statement.
Ratterman will keep the CEO role in the combined company operating under BATS Global Markets, while Direct Edge CEO William O'Brien will be president.
The new entity exclusively will use the proprietary BATS technology and will be headquartered near Kansas City, Missouri, where BATS is currently based.
It will have additional offices in New York and London, and in Jersey City, New Jersey, the location of Direct Edge's headquarters.
BATS also operates a U.S. equity options market and BATS Chi-X Europe, the largest pan-European equities exchange by market share and value traded.