BATS Catching Up to Rivals

BATS is closing in.

BATS Holdings, parent company to the BATS Exchange, reported a matched market share in all three tapes of 11.44 percent in October, a new record.

That’s up from 10.5 percent in September and about 7 percent a year ago.

The uptick brings it one step closer to catching its three rivals, which are seeing declines or stagnation in their market shares.

Like all market centers, BATS saw a big jump in the number of shares traded on its platform in October due to the recent market turmoil. But it also witnessed more traders opting for its platform over others’.

In October, BATS matched a record 10 percent of all Tape A, or New York Stock Exchange listed, securities. It matched a record 16 percent of all Tape B, or American Stock Exchange and NYSE Arca listed, securities. Most of the volume in Tape B trading is of exchange-traded funds. The data takes into account those shares matched internally by broker-dealers.

Based on data taken from BATS’ website, BATS is the fourth largest exchange. In a recent five-day period it averaged a 13 percent share of all shares matched by exchanges, trailing the NYSE by only five percentage points. The data does not consider those shares matched internally by broker-dealers.
BATS, which was an ECN until the Securities and Exchange Commission granted it exchange status in August, completed its transition to exchange trading yesterday. It now trades all symbols as an exchange.

The three-year-old company expects its new status to provide a further boost to its market share. “We expect to see a significant market share pop once we fully transition to an exchange,” Randy Williams, BATS director of marketing and communications, said at last month’s Security Traders Association national convention.

He added: “The primary driver [for exchange status] was to be able to control getting our quote out to the market. If you want everyone in the market to see your quotes in real time, you have to be in control.”

As an ECN, BATS displayed its quotes through the National Stock Exchange and the International Securities Exchange.

Data from BATS’ bigger rivals paint a different picture.

NYSE Group statistics for the month of October suggest the exchange operator is struggling. In NYSE-listed securities, NYSE Group, which includes both the Big Board and NYSE Arca, matched about 43 percent of all shares. That’s down from 53 percent in January.

In Nasdaq-listed names, NYSE Group is up only slightly from January with a 17 percent share. In ETFs, it is down slightly at 29 percent.

Nasdaq has yet to release its October data, but statistics through the third quarter show a drop in its matched market share of Nasdaq-listed securities to 41 percent, down from 47 percent in the first quarter. On the NYSE front, it is matching about 23 percent of all shares, up slightly from 21 percent in the first quarter.

The data from NYSE Group and Nasdaq takes into account those shares matched internally by broker-dealers.