BATS Europe to Butt Heads With Chi-X Europe Over Depositary Receipts
September 1, 2010
BATS Europe will soon compete head on with Chi-X Europe in trading international depositary receipts.
The subsidiary of U.S market operator BATS Global Markets says that later this month it will begin trading depositary receipts pending regulatory approval and its review of its clearinghouse European Multilateral Clearing Facility (EMCF).
Chi-X Europe apears to have a head start. On Sept. 3, the multilateral trading facility will start trading depositary receipts. And also be clearing clearing through EMCF.
BATS Europe says that its smart order routing service will send orders to the London Stock Exchange’s International Order Book and other multilateral trading facilities to ensure traders find the best price possible. While BATS Europe has not announced its fee for trading depositary receipts, its CYCLE platform, launched in January 2010, currently charges 0.5 basis points for each trade routed to displayed trading venues and 0.3 basis points for routing to non-displayed platforms such as dark pools.
Depositary receipts in general represent shares in the underlying shares of a company listed in its home market. Investors buy depositary receipts – particularly in the U.S. – to avoid having the additional expense and administrative headaches involved with trading and processing transactions outside their home market. The LSE’s International Order Book, gives its members access to depositary receipts from 46 countries that are listed on the exchange. NYSE Euronext launched its NYSE Euronext London unit in July but that has yet to attract any companies.
BATS already trades cash equities and equivalents, as well as exchange-traded funds, exchange traded commodities and real estate investment trusts. In January, BATS Europe began trading Spanish equities and in March it did so for Irish stocks.
BATS Europe is one of the three multilateral trading facilities gaining ground against European domestic exchanges.
According to a study done by TAG, a transaction cost analysis provider, and agency brokerage CA Cheuvreaux, BATS Europe’s market share in the second quarter of this year grew to 5.8 percent from 5.1 percent in the first quarter. Meanwhile Chi-X Europe’s grew to 18.5 percent from 17.9 percent for the previous quarter. Turquoise saw its markets share grow to 4 percent from 2.5 percent.
