BATS announces the conclusion of two separate investigations into the development of order types; one relates to BATS and the other relates to Direct Edge.
With regards to BATS, the Securities and Exchange Commission (SEC) has concluded its investigation with no action taken, and we are pleased to have this matter formally closed.
With respect to Direct Edge, the SEC is taking an enforcement action against the legacy Direct Edge exchanges with respect to functionality that was implemented prior to the acquisition by BATS. We entered into a settlement agreement with the SEC, without admitting or denying the allegations, in order to put this matter behind us.
The SEC does not allege that there was anything inherently inappropriate about the order type functionality. Rather, the SEC alleged that the price sliding functionality was not completely and accurately disclosed in Direct Edge’s rules.
We have cooperated with the SEC staff throughout both investigations, and thank the staff for their thoughtful consideration and discussion of the relevant facts and policy issues.
BATS established a reserve for the SEC settlement as part of the Direct Edge acquisition and the impact is already reflected in its third quarter financial statements.
BATS will hold a customer call at 11 a.m. ET Tuesday January 13, 2015 under the coordinates below. We ask that all other audiences reach out to comms@bats.com with any questions.