US investment bank Lehman Brothers has acquired a minority stake in Missouri-based ECN operator Bats Trading. Financial details of the transaction were not disclosed.
Based in Kansas City, Bats (Better Alternative Trading System) was founded in 2005 by Dave Cummings, founder of high-speed, automated liquidity provider Tradebot Systems.
The Bats platform, which is designed to handle high-speed, high-volume and anonymous algorithmic trading for broker-dealers, launched in January 2006. The system was recently averaging more than 40 million shares per day in trading volume.
Michael Bleich, head of liquidity strategy at Lehman says the emergence of the Bats Trading system "is a significant development for the marketplace and will greatly benefit our clients." He adds: "We look forward to other institutions also realising the value of this platform."
The deal is the latest in a series of investments made by Wall Street firms in small ECNs and regional electronic exchanges following Nyse's merger with Archipelago and Nasdaq's purchase of the Inet e-trading system last year.
Citigroup acquired OnTrade earlier this year, while Knight Capital Group bought out the Attain ECN in May 2005 which it has since relaunched as the Direct Edge ECN.
The all-electronic National Stock Exchange and the Philadelphia Stock Exchange have also received investments from Wall Street firms, while options exchange operator International Securities Exchange (ISE) has inked a deal with a group of high-profile broker dealers and exchange members to launch an electronic equities trading platform.