Bats Global Markets, Inc

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Bats Global Markets, Inc
Bats CBOE-200px.png
Founded 2005
Headquarters Kansas City, Missouri
Employees 300
Products U.S. equity trading

Bats Global Markets (formerly an acronym for Better Alternative Trading System) is a second-generation electronic communication network (ECN) founded in June 2005 by David Cummings, the owner of Tradebot Systems in Kansas City.[1][2] It is now a part of Cboe Global Markets, Inc.

Bats launched trading on Jan. 27, 2006 and quickly became the third-largest U.S. equities market by volume, grabbing 10 percent of United States equities markets two years after it opened.[3][4]

Bats was acquired by CBOE Holdings on February 28, 2017 for $3.4 billion after Bats shareholders approved the merger agreement in January.[5] [6] Bats Chief Executive Chris Concannon became president and chief operating officer of the combined company, but was later replaced by Chris Isaacson as executive vice president and chief operating officer at Cboe Global Markets.[7]

The new options and equities exchanges Bats launched, BZX Exchange, BYX Exchange, EDGA Exchange, and EDGX Exchange, are now the four equities markets operated by Cboe.[8]

Insight into the Bats Integration from Cboe's Lowenthal (April 2017)

Bats Global Markets operated 11 markets globally. Its two U.S. stock exchanges, the BZX Exchange and the BYX Exchange, together processed about 19 percent of all U.S. equity trading daily, and their European exchange, Bats Europe, processed about 22 percent of that market.[9] It also operates two U.S. options exchanges, Bats Options and EDGX Options.[10] Bats was based in Kansas City, Mo. with additional offices in New York and London. It was owned by 13 Wall Street banks and electronic trading firms.[11]

Cummings was replaced by Joe Ratterman as CEO on July 1, 2007.[12]

BATS merged with Direct Edge on January 31, 2014, creating the U.S.'s second largest exchange operator, ahead of NASDAQ but behind the New York Stock Exchange.[13] [14] [15] [16] BATS CEO Joe Ratterman served as CEO of the merged company until March of 2015, when he was replaced by Chris Concannon.[17]

Bats successfully launched an IPO on April 15, 2016. Shares traded at $22.78 at midday, up 20 percent, giving Bats a market value of $2.2 billion. Bats had attempted to go public once before but had to withdraw that bid after a technology glitch caused the bottom to fall out of its stock.[18] [19]


BATS was founded in 2005 by David Cummings and 12 associates, including Chairman Joe Ratterman, as an electronic communications network (ECN) in a North Kansas City storefront. At that time it was largely composed of software engineers and was immediately an advocate for competition, working closely with customers and other industry participants.

BATS launched in January 2006 with an aggressive pricing scheme that rewarded liquidity providers in an effort to entice broker-dealers to trade on the exchange.[20][21]

In August 2008, BATS Trading Inc. received approval from the Securities and Exchange Commission to operate a stock exchange that would compete with NYSE Euronext's New York Stock Exchange and Nasdaq OMX Group Inc.'s Nasdaq Stock Market.[22]

BATS voluntarily withdrew its version of a flash order type in response to controversy and the threat of potential regulatory intervention in August 2009.

BATS launched its first U.S. equity options exchange, BATS Options on February 26, 2010 with the first transaction taking place based on an Apple contract (APPL). The company targeted a 4-percent market share in U.S. options for 2010.

In November of 2011, Bats Europe was formed as BATS Chi-X Europe when the two leading pan-European multilateral trading facilities, BATS Trading Europe and Chi-X Europe, combined.[23]

On May 13, 2011, BATS Global Markets announced it would launch an initial public offering.[24] The company had been privately held and majority owned by brokers and big banks including Getco, Wedbush, Lime, Citi, Credit Suisse, Morgan Stanley, Deutsche Bank and JPMorgan.[25]

However, BATS withdrew its IPO on March 25, 2012, the same day as its attempted launch, after a technical glitch caused the bottom to fall out of its stock. The glitch affected other stocks trading on BATS as well, including Apple.[26] BATS CEO Joe Ratterman apologized for the incident in a letter to customers.[27][28] On March 28, 2012, Ratterman was stripped of his chairman title.[29]

The exchange made a second attempt at an IPO in December of 2015, before its final successful IPO in 2016.[30]

On Jan. 9, 2013, BATS told investors that computers for its two equity exchanges and one options platform allowed some trades over a period of more than four years to take place at prices inferior to the best available bid or offer, a violation of SEC regulations. [31] The problem involved about 450,000 transactions and resulted in a loss to customers of $420,360.57, the company said.[32] [33]

In August of 2013, Lehman Brothers Holdings’ estate exited its investment in BATS Global Markets, and all of Lehman's stake was bought by the private-equity firms Spectrum Equity Investors LP and TA Associates Management LP.[34] Lehman had been the second-largest Bats owner, holding a 12.6 percent of the voting rights stake in BATS. Other stakeholders are BATS’ founder Tradebot Systems, Citigroup, Bank of America, Credit Suisse, Deutsche Bank, Wedbush, KCG (Knight Capital Group) and Morgan Stanley.[35]

In July 2014 BATS became the world’s largest stock exchange operator for the first time, with market shares of 20.3 percent in U.S. equities and 21.5 percent in European equities.[36]

William O'Brien left BATS in July of 2014 after serving as president after the merger with Direct Edge. In August 2014 BATS entered into negotiations with U.S. regulators to settle accusations that Direct Edge gave unfair advantages to high-frequency traders. The talks came two years after the SEC began an inquiry into certain types of high frequency trading and whether they were disadvantageous to other investors.[37] O'Brien had sparred on CNBC with Michael Lewis, the author of the book "Flash Boys," which criticized firms like BATS for using high frequency trading technology.[38]

In January of 2015 BATS agreed to pay a record $14 million fine to the U.S. Securities and Exchange Commission to settle the allegations involving Direct Edge. The SEC contended that Direct Edge didn’t accurately disclose its order types.[39] [40]

Also in January of 2015, KCG Holdings Inc. agreed to sell its institutional foreign-exchange-trading business, KCG Hotspot, to BATS for $365 million in cash.[41]

On January 21, 2015, BATS Trading filed a petition with the SEC to introduce regulatory reform that would: 1. Reduce potentially excessive incentives to provide liquidity in the most active securities and 2. Empower institutional and retail investors by providing them with more and better quality information about how their orders are handled.[42] On May 5, 2015, the Securities Industry and Financial Markets Association (SIFMA) backed BATS' proposal, saying the suggested reforms would improve market transparency.[43]

BATS launched its second options exchanged, EDGX Options in November of 2015.[44] [45] Unlike the company's BZX Options market, which trades based on a price-time trading model with maker-taker pricing, EDGX Options uses a customer priority/pro rata allocation model, which prioritizes orders based on price and size. EDGX is designed to compete with options exchanges run by Nasdaq OMX Group and International Securities Exchange with a similar pricing model.[46]

On October 1, 2015, BATS launched the BATS ETF Marketplace, which pays ETF providers as much as $400,000 a year to list on BATS. Payments vary depending on average daily volume.[47]

In March 2016 Bats agreed to acquire, a provider of ETF data, news and analysis.[48]

Bats went public on April 15, 2016.

In August of 2016, Bats acquired Javelin SEF LLC, a swaps exchange, to enhance its foreign exchange trading operations. Bats said it the deal would speed up its plans to offer non-deliverable forwards (NDFs) for the FX market, which allow investors to hedge their exposure to restricted foreign currencies against freely traded currencies.[49]

Cameron and Tyler Winklevoss, AKA The Winklevoss Twins, proposed to list the world's first bitcoin ETFs on the Bats BZX Exchange. Their proposal was rejected twice by the SEC, once in 2017 and again in 2018.[50][51]


In February of 2014 BATS selected Equinix as the primary data center provider for all of its exchange platforms. [52]

On June 30, 2014 BATS Global Markets unveiled BATS One Feed, a product that provides market participants real-time market data across all four equity exchanges operated by BATS. One Feed will be available starting Aug. 1, 2014, pending a filing with the Securities and Exchange Commission.[53]


BATS Global Markets was named “Best Exchange Technology” at the 2014 Market’s Choice Awards, as voted by industry participants and the editors of Markets Media magazine, for the second consecutive year. [54]

Volume and Market Share[edit]

Year Total Annual Volume Percent Change
2016 448,443,108 12.7%
2015 397,881,184 97.0%
2014 201,985,667 33.0%
2013 151,814,889 15.8%
2012 130,624,660 (-)11.9%
2011 148,338,460 490.9%
2010 25,103,245 --


  1. Trading Upstart BATS Tops 1 Billion Volume Mark.
  2. Merrill Buys BATS Trading Stake.
  3. BATS Trading's Exchange Application is Open to Public. Kansas City Business Journal.
  4. Upstart Financial Firm Bats is Challenging NYSE, Nasdaq. Arizona Republic.
  5. CBOE Holdings Announces Close of Acquisition of Bats Global Markets. CBOE.
  6. Bats Global Markets Announces Stockholder Approval of Merger Agreement with CBOE Holdings. BATS.
  7. CBOE Holdings Agrees to Acquire Bats Global Markets to Strengthen CBOE Holdings' Global Position in Innovative Tradable Products and Services, and Achieve Meaningful Cost and Operational Efficiencies. CBOE.
  8. Cboe U.S. Equities Exchanges Overview. Cboe.
  9. Bats press release February 2017. Bats.
  10. BATS September 2013 Volume. BATS.
  11. BATS Exchange to Try Again at an IPO. The New York Times.
  12. BATS Trading Promotes Executive to COO. Kansas City Business Journal.
  13. A message from Joe and Bill. BATS Global Markets.
  14. U.S. regulator approves merger of BATS and Direct Edge exchanges. Reuters.
  15. SEC Approves BATS-Direct Edge Merger. The Wall Street Journal.
  16. BATS Global Markets and Direct Edge Agree to Merge. BATS and Direct Edge.
  17. BATS Global Markets Buys Direct Edge. ABC News.
  18. Bats shares surge amid successful listing. The Financial Times.
  19. Bats surges after long-awaited IPO. CNBC.
  20. Swinging At Nasdaq.
  21. BATS Trading Considers London Move. Reuters.
  22. SEC Approves BATS Exchange. The Wall Street Journal.
  23. BATS Cleared to Buy Chi-X Europe. WSJ.
  24. Bats Files for IPO as Exchange Seeks Currency Amid Deals. Bloomberg.
  25. BATS Exchange to launch IPO service. Financial Times.
  26. BATS Initial Public Tease: Nine Seconds of Free Fall. The Wall Street Journal.
  27. A Message From BATS CEO Joe Ratterman (PDF). BATS.
  28. Bats CEO Scuttled IPO on Potential for Erratic Trading. Bloomberg.
  29. BATS chief executive stripped of chairman title. CNN Money.
  30. BATS Exchange to Try Again at an I.P.O.. The New York Times.
  31. SEC effectiveness questioned after BATS error. MarketWatch.
  32. BATS: Yes, We Have No CIO. The Wall Street Journal.
  33. Bats Blaming Market Rules as Call of Overhaul Grow. Bloomberg.
  34. Lehman Exits Bats Global Stake Through Sale to Spectrum, TA. The Washington Post.
  35. BATS Attracts 2 Private Equity Investors. Wall Street & Technology.
  36. BATS Global Markets Becomes Largest Equities Trading Venue in July. Forex Magnates.
  37. Bats Said in SEC Settlement Talks Over High-Speed-Trading Perks. Bloomberg.
  38. Bats President Who Rebuked Michael Lewis Leaves Exchange. Bloomberg.
  39. Bats Pays $14 Million Settling Claims Markets Obscured Rules. Bloomberg.
  40. SEC Closes Order Type Cases: No Action Against BATS, Direct Edge Settles. Traders Magazine.
  41. KCG to Sell Institutional Forex Trading Business to BATS. The Wall Street Journal.
  42. BATS Files Market Structure Reform Petition with SEC. Traders Magazine.
  43. SIFMA backs BATS' market reform proposal. Reuters.
  44. BATS Receives SEC Approval to Launch EDGX Options Market. BATS.
  45. BATS Reports Successful Launch of EDGX Options. BATS.
  46. BATS Launches Options Market, Hires Senior NYSE Officer. The Wall Street Journal.
  47. BATS Will Offer to Pay Companies to List ETFs on Exchange. The Wall Street Journal.
  48. Bats Global Markets to Acquire, Broadening Content Offerings for Issuers, Brokers and ETF Investors. Bats.
  49. Exchange operator Bats to buy swaps trading platform Javelin. Reuters.
  50. SEC Rejects Winklevoss Bitcoin ETF Bid. Coindesk.
  51. Winklevoss twins bitcoin ETF rejected by SEC. Coindesk.
  52. BATS Global Markets Selects Equinix’s Secaucus Data Center for BATS and Direct Edge Exchanges. BATS Global Markets.
  53. BATS to launch BATS One Feed. Wall Street & Technology.
  54. BATS press release. BATS Global Markets.