Bats Trading, the electronic alternative to Nasdaq and Nyse, has filed an application with the US Securities and Exchange Commission (SEC) to become a fully licensed securities exchange.
The Bats ECN, which is designed to handle high-speed, high-volume and anonymous algorithmic trading for broker-dealers, launched in January 2006. Since then a number of banks have invested in the system including Morgan Stanley, Credit Suisse, Lehman Brothers and Citi.
Bats claims a 8-10% market share in US equities. An aggressive one month pricing plan introduced in January has helped drive trade volumes during the year and forced both Nasdaq and Nyse to adjust their fees. In July Bats exceeded a daily volume of 500 million shares for the first time and recorded one-day record volume of 774 million shares in October.
Bats CEO Joe Ratterman says in terms of the critical metric of matched market share, Bats has established itself as the third largest market centre in the US.
He says the motivation to become an exchange "stems from our desire to participate directly in the national market system" and to be on the "same regulatory playing field as our primary competitors".
"Taking the necessary steps to operate our market as a registered securities exchange is the right thing to do and shows the maturity and credibility that Bats brings to participating in the national market system," says Ratterman. "We want to provide our customers a viable, competitive, and long-term alternative to the two incumbent exchanges."