Share This Page

BATS will be No. 2 among stock exchanges

| Tuesday, Aug. 27, 2013, 12:01 a.m.

NEW YORK — Stock exchange operator BATS Global Markets is buying Direct Edge to create the nation's second-biggest stock exchange.

The new company will account for about 21 percent of the approximately 6.5 billion shares that are traded daily on exchanges, according to BATS. It would leapfrog over the Nasdaq and rank behind the New York Stock Exchange.

The combination is “an important milestone for the U.S. equities market,” said BATS CEO Joe Ratterman, who will serve as CEO of the merged company.

The deal is part of a trend of consolidation among global stock exchanges. Technology has increased the speed at which trades are processed but reduced the profit margins that exchanges can make on shares traded.

Earlier this month, regulators approved an $8 billion sale of the NYSE to Atlanta-based IntercontinentalExchange, or ICE. The NYSE's parent company was itself created by a merger of the NYSE Group and Europe's Euronext exchange company.

The NYSE has a market share of about 23 percent, and Nasdaq has a market share of 18 percent.

The four U.S. stock exchanges run by BATS and Direct Edge will continue to operate.

Both companies are privately owned. Direct Edge is owned by a consortium that includes International Securities Exchange, Knight Capital Group, Citadel Derivatives Group, The Goldman Sachs Group and J.P. Morgan.

BATS Global Markets is owned by a group that includes Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley.

The combined company will use BATS technology and be headquartered in Kansas City.

The deal is expected to close in the first half of next year.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.