Not a member yet? Register now and get started.

lock and key

Sign in to your account.

Account Login

Forgot your password?

Bats Global Markets Idea Proposal

Bats Global Markets Idea Proposal

Will Bats Global Markets monetize its platform to successfully close the gap with Nasdaq and NYSE?

Report Available: August 10, 2016


Blueshift’s initial research showed BATS with an opportunity to gain ground on its primary competitors, NDAQ and NYSE. It has substantial room to grow its market data offering, it can potentially increase revenue from transaction fees with a change in pricing, and it has proven successful in a small part of the options market that gives reason to believe it can become a bigger player in that overall space. At the same time, getting competitors’ customers to change their ways could be a challenge, and the recent IEX approval ruling presents another competitor fighting for market share.



  1. BATS is the second largest exchange operator in the U.S. with four exchanges, going public on its own exchange April 15th. It holds 21.3% market share in its U.S. equities business, up from 20.8% a year ago and ahead of NDAQ’s 18.8%. BATS’ Q1 performance set records for net revenue, earnings, and margin. It does almost as much trading as the NYSE and more trading than NDAQ on a daily basis.
  2. In response to prices coming down on trading as a result of Reg NMS opening up competition, as well as trading volumes declining, NYSE and NDAQ have pivoted away from being focused on transactions and become more subscription-data focused. NDAQ sells about $400 million worth of data products per year, offering information that best captures value from the data on their exchanges. BATS, in its effort to be the low cost leader, initially did not charge for its market data. Even now, the company makes only about $20 million a year in revenue from selling its proprietary data, though it is beginning to push this product and is on pace to make about $30 million this year, still a far cry from what NDAQ gets for a similar product of equal value.
  3. As for transaction fees, BATS’ net capture in U.S. equities is $0.019 per 100 touched shares, down from $0.021 a year ago and far below the $0.035 to $0.040 from NDAQ and NYSE. BATS’ U.S. equities segment saw transaction fees rise $51.5 million because of an increase in average daily volume (ADV) from 6.9 billion shares in 2015 to 8.6 billion shares in 2016.
  4. In U.S. options, BATS was first in the price-time priority market, with a share between 30% and 40%. It holds 10.2% share in the overall U.S. options market, up from 8.8% a year ago and 8.9% in Q4.
  5. IEX recently won approval to become the 13th national stock exchange. IEX slows the speed of trading by 350-millionths of a second, protecting investors from high-speed trading that can front-run orders of slower orders on other exchanges in a way that proponents say will balance the playing field. Opponents of IEX’s approval said the “speed bump” would create stale prices and the potential for manipulation. Others posited that allowing IEX to be an exchange creates a monopoly since it is the only exchange with the delay.


Can BATS increase revenue significantly with more aggressive sales of its proprietary market data? How long would it take for BATS’ market data revenue to reach NDAQ’s level? Can BATS successfully raise prices on its transaction fees without ceding too much market share? Is BATS better off lowering prices on its transaction fees? Will traders revolt if customers move to BATS from NDAQ or NYSE? What does BATS need to do to be more successful in the options market? Can it take its formula for success in the price-time priority market and apply it to other options products with similar results? What effect will the IEX approval ruling have on BATS? To answer these and other questions, Blueshift will issue a market research report by gathering data from independent sources in the following areas: BATS Customers, Competitors’ customers, Exchange and ECN competitors, Regulators, and Industry specialists.


Companies: Bats Global Markets (BATS), Nasdaq (NDAQ), International Exchange (ICE)


Research Begins: July 25, 2016